Superior Court of Justice - Ontario

COURT FILE NO.: FS-11-372987

DATE: 20121220

BETWEEN:

Sherry Lynne Sutherland-Yoest

Applicant

– and –

David Sutherland-Yoest

Respondent

COUNSEL: H. Niman and D. MacKenzie, for the Applicant Morris Cooper, for the Respondent

HEARD: December 7, 2012

BEFORE: Kiteley J.

REASONS FOR JUDGMENT

[1] This is the fourth[^1] attempt on behalf of the Applicant to compel compliance with outstanding orders. On January 26, 2012, I heard submissions on the motion on behalf of Mrs. Sutherland-Yoest that her husband be found in contempt of court. Counsel for Mr. Sutherland-Yoest delivered a responding affidavit but Mr. Sutherland-Yoest did not attend the motion. In reasons for decision dated January 30, 2012 I found Mr. Sutherland-Yoest in contempt of parts of the order made October 20, 2011 and the consent order made October 27, 2011. I made several orders including that Mr. Sutherland-Yoest appear before me on February 9^th^ for purposes of purging his contempt. I adjourned Mr. Sutherland-Yoest’s motion for an order for sale of the former matrimonial home.

[2] Mr. Sutherland-Yoest did not appear on February 9^th^. I issued a warrant for his arrest and I directed him to attend on February 16^th^.

[3] Mr. Sutherland-Yoest attended on February 16^th^. He gave evidence and submissions were made. At the conclusion I rescinded the arrest warrant and did not issue a committal warrant. On March 5, 2012, I released detailed reasons for decision and made orders with respect to disclosure and other issues.

[4] By order dated March 22, 2012, I authorized Mr. Sutherland-Yoest’s counsel to withdraw as his solicitor of record.

[5] Counsel for Mrs. Sutherland-Yoest brought a motion for contempt and for an order striking Mr. Sutherland-Yoest’s Answer and Claim. Mr. Sutherland-Yoest did not attend on May 24, 2012. I made an order and adjourned the matter to July 31^st^ on terms.

[6] Mr. Sutherland-Yoest attended on July 31^st^ and gave evidence. I adjourned the matter to Friday August 3^rd^ at which time I made findings that Mr. Sutherland-Yoest was in contempt of various orders and I made an order requiring him to purge his contempt by meeting a timetable as to disclosure (September 15, 2012) and as to payment of costs (by August 19, 2012).

[7] On August 10, 2012 Mr. Cooper filed a notice of change of representation.

[8] Mr. Cooper sent correspondence including the following: letter dated September 13^th^ from Linda Brent with a progress report on the accounting of funds Mr. Sutherland-Yoest had received from all sources for the period October 2008 to January 2012 (which was required pursuant to the consent order made October 27, 2011); report dated September 13, 2012 as to the transactions in the names of his wife and daughter that he had made during the period October 28, 2008 and January 2012 (required pursuant to the October 27^th^ order) which was incomplete; letter dated September 13^th^, enclosing a statement from Victoria Bank as of January 19, 2011 and a letter from Mr. Durkin dated September 12^th^ as well as Mr. Sutherland-Yoest’s 2011 Canadian income tax return; letter dated September 11^th^ from the Victoria Bank.

[9] Needless to say, Mr. Sutherland-Yoest did not fully comply with any aspect of the outstanding orders.

[10] On September 17^th^ Ms. MacKenzie took the initiative to arrange an attendance before me on yet another motion for contempt. The first date that counsel and I were available for a case conference was November 9^th^ at which time I set December 9^th^ as the date for the hearing and I made a timetable for service of materials. Mr. Sutherland-Yoest has known since September 17^th^ that counsel for Mrs. Sutherland-Yoest intended to continue to pursue compliance.

[11] On November 13^th^, the Form 31 Notice of Contempt Motion, affidavit sworn November 12^th^ of Mrs. Sutherland-Yoest, affidavit sworn November 12^th^ of Ani Vartanian and Notice of Motion returnable December 9^th^ were served. Attached to the affidavit of Mrs. Sutherland-Yoest were copies of transcripts of the hearings on July 31^st^ and August 3^rd^.

[12] Mr. Sutherland-Yoest responded with an affidavit sworn November 21^st^, a financial statement sworn November 26^th^, and an affidavit of Thomas E. Durkin III sworn November 26^th^.

[13] Mrs. Sutherland-Yoest provided two affidavits sworn December 3^rd^, one in response to the evidence filed on behalf of Mr. Sutherland-Yoest and one describing changes to her financial statement.

[14] In a consent order made October 27, 2011 by Czutrin J., Mr. Sutherland-Yoest was directed to produce the disclosure required to determine his income and net family property; to account for the funds he had received from all sources in the preceding three years; and to provide a fresh financial statement with all the requisite information as at the date of marriage, valuation date and date of statement. On September 14, 2012, Mr. Cooper provided a copy of a report dated September 13, 2012 from Linda Brent purporting to comply with the October 27^th^ order and with paragraph 57(a) of the order made January 30, 2012. Ms. Brent pointed out that she had not had access to Christina’s trading account. Mr. Cooper had provided a status report from Ms. Brent on the analysis required pursuant to paragraph 57(b) of that order, namely to account for transactions over a three year period. On December 6^th^, Mr. Cooper served a report in which Ms. Brent indicates that the identified uses of funds during the review period totaled approximately $26 mil, leaving an un-reconciled amount of approximately $1.2 million.

[15] On December 7^th^, Mr. Cooper provided a copy of that report to me without an affidavit in support. Mr. Niman had received it the day before the hearing and had not had time to digest it.

Motion Returnable December 9, 2012

[16] In the notice of motion, the following relief is sought:

1. An order striking the Respondent’s pleadings by reason of his ongoing failure to comply with the following Court orders:

(a) Order dated August 3, 2012 that the Respondent will purge his contempt by doing the following:

(i) By September 15, 2012, he will serve and file a sworn financial statement;

(ii) By September 15, 2012, he will comply with paragraph 10 of the order made October 27, 2011 which states:

The Respondent shall produce all disclosure relevant to the determination of his income and net family property within 30 days and without limiting the generality of this statement, he shall provide a full and complete accounting of all corporate and personal holdings, business interests and properties in which he has an interest in any jurisdiction, whether such interest is direct or indirect, legal or beneficial.

(iii) By September 15, 2012, he will comply with paragraph 11 of the Order made October 27, 2011 which states:

Within 30 days the Respondent shall disclose and provide particulars of all transactions entered into by him in the Applicant’s name or in the name of the parties’ daughter, Christina Sutherland-Yoest, within the past 3 years.

(iv) By September 15, 2012, he will comply with paragraph 12 of the Order made October 27, 2011 which states:

Within 30 days the Respondent shall provide an accounting of funds he has received from all sources for the past three years.

(v) By August 19, 2012, he will comply with paragraph 43 of the reasons for decision dated March 5, 2012, which states:

By March 19^th^, 2012 and on or about the 19^th^ of each month for 6 months, Mr. Sutherland-Yoest will ensure that Mr. Durkin provides to counsel for the wife the documents and information necessary to keep the wife and her counsel informed as to the status of the joint venture. If counsel are unable to agree as to what documents and information are to be provided on a monthly basis, then Madam Justice Kiteley will make that determination. Before providing the first installment, counsel for the wife and the wife shall sign the confidentiality agreement required by Mr. Durkin.

(vi) By August19, 2012, he will comply with the May 24^th^ order identifying all outstanding costs orders as follows:

(a) Hearing on February 9, 2012: $13,081.82;

(b) Hearing on January 26, 2012: $43,038.28;

(c) Hearing on February 16, 2012: $ 5,555.08;

(d) Hearing on May 24, 2012: $ 1,500.00.

(b) Order dated August 17, 2012 requiring the respondent to pay costs of the motion heard July 31, 2012 and August 3, 2012 fixed in the amount of $19,296.73 by August 27, 2012.

[17] In the Notice of Contempt Motion that had been served on November 13, 2012 counsel had asked for an order finding Mr. Sutherland-Yoest in contempt of the orders referred to above and had asked that I impose a monetary penalty/fine payable to the Applicant as well as any other order including but not limited to a period of incarceration, along with full recovery costs.

[18] On December 7^th^, Mr. Niman asked that the contempt aspect of the motion be adjourned to a later date because he had just received the December 6^th^ report of Linda Brent and he needed time to analyze it and determine the extent to which Mr. Sutherland-Yoest had complied with the several orders requiring an accounting. Mr. Cooper took the position that Mr. Sutherland –Yoest had purged his contempt and that motion should be dismissed.

[19] I agree that counsel for Mrs. Sutherland-Yoest is entitled to a reasonable period of time to consider that extensive document. Since counsel did not agree on adjourning this aspect of the motion to a specific date, I will adjourn it to the date below.

Striking Pleadings

[20] Rule 1(8) of the Family Law Rules provides as follows:

The court may deal with a failure to follow these rules, or a failure to obey an order in the case or a related case, by making any order that it considers necessary for a just determination of the matter, on any conditions that the court considers appropriate, including,

(a) An order for costs;

(b) An order dismissing a claim made by a party who has willfully failed to follow the rules or obey the order.

[21] Rule 14(23) provides as follows:

Failure to Obey Order Made on Motion

A party who does not obey an order that was made on motion is not entitled to any further order from the court unless the court orders that this subrule does not apply, and the court may on motion, in addition to any other remedy allowed under these rules,

(a) Dismiss the party’s case or strike out the party’s answer or any other document filed by the party;

(b) Postpone the trial or any other step in the case;

(c) Make any other order that is appropriate, including an order for costs.

[22] The onus is on the Respondent to show, on a balance of probabilities, that rule 14(23) is not applicable.[^2]

[23] Rule 2(2) to (4) of the Family Law Rules sets out that the primary objective of the rules is to enable the court to deal with cases justly and identifies some of the criteria for determining the element of “justly”.

[24] In the reasons for decision of W. v W.[^3], I considered the issues arising from the application of these rules and I will not repeat them. Counsel for the applicant also relied on the recent decision by Czutrin J. in Bassett v. Bassett.[^4]

[25] In his submissions, Mr. Cooper took the position that his client had purged his contempt to the extent that he can, that the motion to strike his pleadings should be dismissed, and that the matter should now move forward in the ordinary way including disclosure by Mrs. Sutherland-Yoest and questioning.

The Evidence on behalf of Mr. Sutherland-Yoest

[26] Mr. Sutherland-Yoest described the “perfect storm” of challenges he had encountered including his unemployment, health issues and unanticipated setbacks in his continuing efforts to establish his new business. He said that he has been obligated to use his savings, deplete his capital and borrow large sums from friends and business acquaintances. He explained that Ms. Brent’s work had been on a stop/start basis as he caught up with her fees and obtained information and documents from third parties. He said that the personal health issues which he described, had “until recently” seriously impaired [his] judgment and ability to think and act clearly. He explained his involvement in the business venture. He said that during 2012 he had borrowed $600,000 and then $200,000 from PR who he described as a personal friend and prospective business partner. He attached documents related to the indebtedness. He insisted that he had no monies on deposit in any “offshore” accounts. He pointed out that he has no assets other than those in his wife’s name or in her possession which included the matrimonial home and the cottage with a cumulative value that he estimated at in excess of $25 million. He reported that his wife had sold one of the boats (as authorized by court order) and had realized $500,000. He said that since April 2012 he had been renting an apartment in Los Angeles for which he paid rent of $12000 per month and furniture rental of $4500 per month but that was coming to an end because he was in arrears of rent and was being evicted. He intended to move to New Jersey and reside in the home of his business partner Mr. Durkin until he found a place of his own.

[27] Mr. Sutherland-Yoest provided a list of the monthly charges on his American Express from April 2011 to February 2012 which totaled over $553,000 and he provided documents that indicated he was being sued for the outstanding balance.

[28] Mr. Sutherland-Yoest identified his watch that he said was in the possession of his wife that he estimated had a current value of between $240,000 and $260,000.

[29] Mr. Sutherland-Yoest noted that he had paid a substantial lump sum to his wife in the summer on account of mortgage payments until December 2012. He said it was borrowed from LR in Montreal who had loaned him $300,000.

[30] Mr. Sutherland-Yoest said that he had cashed in his entire retirement savings plan which netted him approximately $77,000. He intended to use that to pay the costs awards but needed it instead to pay his living expenses, his lawyer and Ms. Brent’s fees so that she would continue her work and provide reports in order that he could purge his contempt.

[31] Mr. Sutherland-Yoest predicted that if he could successfully obtain financing, he expected to earn an income of $250,000 per year from which he would pay “reasonable spousal support based on her needs and my ability to pay”.

[32] Mr. Sutherland-Yoest described how he and his wife had maintained a very high standard of living because his income prior to March 2011 was very high.

[33] Mr. Sutherland-Yoest said that he had “to the extent I am able” provided Ms. Brent with the information she required to provide details of his present financial situation and the movement of monies in and out of bank accounts and stock brokerage accounts, back through 2008. He said some of it was difficult to assemble as it required cooperation from his accountants (Deloitte), the RBC and a Texas-based brokerage firm (SMS). And it required cooperation from their daughter to permit access to her records and accounts into which he had moved money. At paragraph 24, he said the following:

Ms. Brent’s office has now been able to account for most of these transactions and, by the date of the Court hearing, I anticipate being able to provide the Court with her updated reports in addition to the ones already delivered. . .

[34] Mr. Sutherland-Yoest said that he had had assistance from Ms. Brent’s office in the preparation of his updated financial statement to correct errors he said had been made by his former lawyer.

[35] The affidavit contained the following at paragraphs 26 to 28:

The upshot is that the bulk of the work that has been conducted by Ms. Brent is not current financial disclosure, but purely an historical explanation of the monies which passed through my control in the years prior to and after separation. I recognize that my wife has been hoping to find that I have $26 million of assets in order that she would not have to pay me the $13 million she owes to me in equalization of our net family property.

My current financial situation is that I have no cash, no assets or income and a significant debt of more than $1.8 million.

To the extent I am capable, I believe I have purged my contempt with respect to compliance with previous disclosure Orders, and will provide whatever further information may be appropriately required to either comply or answer new questions arising out of Ms. Brent’s reports. Subject to my lack of funds to pay legal and accounting fees, I have made every effort to purge my contempt.

[36] Mr. Sutherland-Yoest provided an update on his business venture and indicated that he is “reasonably confident of our ability to conclude these transactions in early January 2013” and that that would allow him to reimburse himself for his expenditures on behalf of the corporation, pay his indebtedness and have funds available to pay his lawyer and Ms. Brent. He said in paragraph 34 that he intended to pay all outstanding costs awards by the hearing date of this motion, if necessary by borrowing more money.

[37] He concluded that it was never his intention to willfully ignore court orders and that he has now done whatever he is able to do to comply. He observed that it is in his interest to bring the proceeding to a conclusion because of the considerable amount of money that his wife would have to pay him to equalize their assets. He noted that it was not in his wife’s interest to move the case forward and said that her real objective is to punish him and send him to jail because he no longer has any money.

[38] Mr. Cooper has filed an affidavit of Mr. Durkin sworn November 26, 2012 in which he agreed with selected portions of Mr. Sutherland-Yoest’s affidavit and he provided documents and information that reflect the status of the joint venture. He said he was hopeful that the transaction would close in late December 2012.

Analysis

[39] Mr. Sutherland-Yoest variously blames his health issues, his former lawyers, his daughter for not providing access to accounts,[^5] and his wife’s lawyers for not signing a confidentiality agreement that would have facilitated the monthly status reports from Mr. Durkin. He takes no personal responsibility for compliance with his obligations, delegating to Ms. Brent, to Mr. Cooper and to Mr. Durkin. He now paints himself as the victim in that his wife has the lion’s share of the assets and he has not been able to access his share. During the hearing on July 31^st^, Mr. Sutherland-Yoest was critical of his wife for decisions she had made. When I pointed out[^6] that the reason she had the ability to take such steps was because he had failed to do certain things, he said he understood the relationship between cause and effect. But he clearly does not see that he bears any responsibility for anything. On July 31^st^, he said[^7] that he wanted to be “extraordinarily proactive” and he planned to stay in Toronto and go to New York but only for a day at a time for in person meetings because he intended to focus on the divorce proceedings. He clearly has not done so.

[40] As indicated above, Mr. Sutherland-Yoest was required by September 15, 2012 to serve and file a sworn financial statement. Aside from the fact that the financial statement sworn November 26^th^ and served November 27^th^ was late by over two months, it is deficient in many respects including:

(a) It indicates he lives in the Regional Municipality of Halton, Ontario and Los Angeles, California yet his evidence is that he had been evicted from his apartment for non-payment of rent and he is intending to reside in New Jersey. He has not resided in Halton since the fall of 2011. While that is not crucial to his financial circumstances, it does indicate that he is not attentive to detail, giving little confidence in the information contained in the sworn financial statement;

(b) He showed his gross income from all sources “last year” as CND$347,196 which is the number that appears on line 150 as his total income in his 2011 income tax return. In a note to the financial statement attributed to a chartered accountant in Ms. Brent’s office, it is reported that that income was from employment received from January 2011 to March 17, 2011; that Mr. Sutherland-Yoest ceased to be a Canadian resident for tax purposes effective April 30, 2011; that, after that date, he exercised warrants and the income was approximately $2.2 million; that his US tax return included his employment income and the income from the exercise of his warrants. The Canadian return did not include the income from the warrants. The Canadian income tax return is not attached (although it had been provided in September 2012) nor is the US tax return attached;

(c) Notwithstanding an income of $347,196, Mr. Sutherland-Yoest shows total yearly expenses of $730,910 including monthly rent of $12000 and monthly furniture rental of $4500 which he no longer pays. He shows monthly mortgage payments on the matrimonial home in the amount of $8744.59 although the monthly expense is $25,000 and although the deposit he made on August 3^rd^, 2012 has been exhausted. He shows monthly mortgage payments on his daughter’s condominium in the amount of $13,593.93 although in paragraph 37 of his wife’s affidavit sworn December 3^rd^, 2012, she says that Christina is paying the mortgage;

(d) Under part 8, disposal of property, he noted “see tax returns”. In Schedule 3 to the 2011 Canadian Income Tax Return where he accounts for capital gains or losses in 2011, he lists 5 corporations, only one of which I can identify as being listed on pages 5 and 6 of the financial statement, namely IESI-BFC Ltd. and the information in Schedule 3 about the sale of warrants in that corporation is inconsistent with the sworn financial statement. This Schedule identifies assets that he has not disclosed as at valuation date;

(e) In paragraph 7 of his affidavit sworn February 8, 2012, Mr. Sutherland-Yoest said he had accounts that were opened in November 2011 at RBC which are not reflected in the current financial statement.

[41] On his evidence, Mr. Sutherland-Yoest has no income and he finances his expenses by borrowing. In the November 26^th^ financial statement, he shows Date of Statement borrowing to include his daughter ($866,250); PR ($792,000) and RCI Environment ($300,000). He has produced no documents with respect to the debt with his daughter, and yet, as indicated above, his sworn financial statement indicates he is paying her mortgage monthly in the amount of $13,593.93. The documents relating to the debt to PR indicate he borrowed $600,000 and then $200,000 which approximates the amount shown in the financial statement.

[42] The documentation with respect to the debts is unsatisfactory. Mr. Sutherland-Yoest signed a letter addressed to Mr. Cooper confirming his indebtedness to PR secured by a promissory note dated March 29, 2012 in the amount of $600,000US; another promissory note dated May 23, 2012 in the amount of $200,000US; a General Security Agreement dated March 29, 2012 in the amount of $600,000US; and the First Amendment to the General Security Agreement dated May 23, 2012 in the amount of $200,000. That letter irrevocably instructs Mr. Cooper to pay what he owes to PR out of the “Divorce Matter”. The Promissory Note in the amount of $600,000 is signed. The principal was due in full on or before September 1, 2012 with interest before maturity at 6% and after maturity at 12%. The other Promissory Note is not signed but the principal amount is $800,000 with the same interest rates. This unsigned Promissory Note required payment of $400,000 on or before June 16, 2012 and the balance on or before September 1, 2012. The GSA is signed by Mr. Sutherland-Yoest but not by PR. It grants a security interest in Mr. Sutherland-Yoest’s equalization payment and in proceeds of insurance in the amount of at least $600,000 “to be obtained as soon as possible”. The First Amendment to the GSA increased the amount secured by $200,000 to $800,000 but it is not signed. In his financial statement sworn November 26, 2012, Mr. Sutherland-Yoest discloses only one policy of life insurance and that is in the amount of $600,000 with his wife as the designated beneficiary. During submissions Mr. Cooper confirmed that Mr. Sutherland-Yoest has not acquired the insurance referred to in the GSA and he has not changed the designated beneficiary on the disclosed policy. There is no documentation to confirm the debt to RCI Environment which Mrs. Sutherland-Yoest indicated at paragraph 27(d) of her affidavit sworn December 3^rd^ was a company associated with LR.

[43] In his evidence on July 31^st^, Mr. Sutherland-Yoest produced documents that were marked as Exhibit 3 that included an unsigned promissory note in favour of DS (his physician in California) in the principal amount of $300,000 which was due on or before October 9, 2012 with interest at 12% together with an unsigned General Security Agreement and Pledge Agreement which contained a direction to repay the amount owed from his equalization payment that he expected to receive in these proceedings. In his affidavit sworn November 21, 2012 he refers to having borrowed $300,000 from his longtime friend and former business partner, LR of Montreal. The financial statement sworn November 26, 2012 does not refer to either DS or LR but does refer to a debt in favour of RCI Environment in the amount of $300,000.

[44] All in all, it seems that Mr. Sutherland-Yoest has the ability to borrow readily very substantial sums of money on limited, if any, security and with documents that are unsigned or are otherwise questionable and on terms with which there is no evidence he has complied. In the ordinary course, payors are not required to incur debt in order to meet spousal support or other obligations. This is not the ordinary situation. Mr. Sutherland-Yoest is a genius at accessing other people’s money and resources whether it is friends and associates such as PR, LR, DS, Mr. Durkin or American Express. Obviously, the non-institutional lenders have considerable confidence in his ability to re-pay these obligations when the joint venture materializes – expected to be in late December (according to Mr. Durkin) or early January (according to Mr. Sutherland-Yoest.) It appears that American Express is pursuing his current indebtedness of approximately $500,000 but, as Mrs. Sutherland-Yoest pointed out in her affidavit, the total charges on his American Express account between April 4, 2011 and January 12, 2012 exceeded $2 million which suggests that he charged and paid approximately $1.5 million during that period.

[45] The joint venture is critical for a number of reasons. Mr. Sutherland-Yoest uses his preoccupation with it as an excuse for not dealing with his disclosure obligations in these proceedings. He insists that it is so imminent that he is able to borrow extensively because he will shortly be able to repay his indebtedness. Very importantly, he has used it as a reason for the court to not make an order that he be incarcerated as a consequence of his contempt because it may impact on licensing requirements for the new business and would jeopardize the joint venture. As counsel points out, when pressed to provide information, the closing of the joint venture is routinely in the month after the court hearing. I am not dealing with the contempt issue at this point. However, the status of the joint venture is extremely important. It was for that reason the Mr. Sutherland-Yoest was ordered to provide monthly disclosure, which he consented to do in the presence of Mr. Durkin, who was going to be the instrument of the regular disclosure.

[46] Mr. Sutherland-Yoest had it within his power to fulfill that consent order and he did not do so, and has provided no explanation for not doing so. The recent information from Mr. Durkin does not satisfy that outstanding obligation. In July 2012, Mr. Sutherland-Yoest blamed Ms. MacKenzie’s office for not signing the confidentiality agreement and excused his non-performance on their default. As the August 3^rd^ reasons indicate at paragraph 16(g) there was no evidence that the draft confidentiality agreement had been sent by Mr. Durkin and there was evidence that it had never been received by Mr. Niman. In any event, Mr. Durkin’s affidavit contains current information with no request for a confidentiality agreement. I infer that the demand for a confidentiality agreement was a red herring.

[47] During submissions, I pointed out to Mr. Cooper that Mr. Sutherland-Yoest had not complied with this very important ongoing obligation to provide disclosure as to the status of the joint venture. Mr. Cooper said that Mr. Sutherland-Yoest could comply by January 7^th,^ 2013. I accept that date and indeed will extend it because of imminent holidays.

[48] As indicated above, in paragraph 24 of his affidavit, Mr. Sutherland-Yoest said that he expected that, by the date of the court hearing, he would be able to account for the remaining transactions involving his wife and his daughter. He did not do so and has provided no explanation for not complying with his own expectation.

[49] Mr. Sutherland-Yoest says he has been providing substantial documentation to Ms. Brent in order that her two reports could be completed. None of that documentation has been provided to Mr. Niman. Mr. Sutherland-Yoest had it within his power to provide it to Mrs. Sutherland-Yoest in furtherance of paragraphs 10 and 11 of the consent order dated October 27, 2011. He did not do so and has provided no explanation for not complying.

[50] Mr. Sutherland-Yoest has failed to pay costs by August 19^th^ and August 27^th^. At paragraph 18 of his affidavit sworn November 21^st^, he said that he had cashed in his entire retirement savings plan which resulted in a net payment of approximately $77,000 and that he had intended to use that money to pay the costs awards, but needed it to pay living expense, his lawyer and Ms. Brent. At paragraph 34 he said that he intended to pay all outstanding costs awards by the hearing date of the motion, if necessary by borrowing more money. That did not happen. No explanation was provided. Yet, as Mr. Niman pointed out, Mr. Sutherland-Yoest showed a bank balance of $70171 in his November 26^th^ financial statement.

[51] Although he has had almost three months from September 15^th^ to provide disclosure and almost four months from the dates in August to pay costs, his attitude is that he has done what he is able to do. I do not accept that Mr. Sutherland-Yoest has done what he is able to do to meet his obligations under various court orders. Far from it.

[52] I make no comment about the adequacy of the report dated December 6^th^ prepared by Linda Brent since Mr. Niman had not had an opportunity to review it.

[53] In accordance with rule 14(23), the request made on behalf of Mrs. Sutherland-Yoest to strike his Answer and Claim is reasonable. Mr. Sutherland-Yoest has not complied with orders for disclosure or for payment of costs. There is ample evidence and justification on which his Answer and Claim should be struck. The onus is on Mr. Sutherland-Yoest to show on a balance of probabilities that rule 14(23) is not applicable. He made no effort to meet that onus. In accordance with Rule 1(8) and rule 2(2) to (4), I should make that order. It is not fair to Mrs. Sutherland-Yoest that she should be required to tolerate such conduct. She is entitled to have the case dealt with justly and that means imposing sanctions on Mr. Sutherland-Yoest for non-compliance.

[54] In paragraph 27 of my reasons for decision dated August 3^rd^, in the context of the motion for contempt, I afforded Mr. Sutherland-Yoest “what will probably be his last opportunity to avoid incarceration”. In August, 2012, Mr. Sutherland-Yoest said he would engage Ms. Brent and Mr. Cooper. He has done so. He has failed to comply with the outstanding court orders but he has shown some progress. Furthermore, he indicated in paragraph 5 of his affidavit sworn November 21, 2012 that he had suffered from health issues which had “until recently seriously impaired [his] judgment and ability to think and act clearly”. I realize that Mrs. Sutherland-Yoest has a different perspective on his evidence as to his health issues. Without accepting his evidence as to the extent of those health issues, I accept and rely on his evidence that he is now liberated from those challenges and will not be using them as an excuse for non-compliance.

[55] I will not strike his Answer and Claim at this point for two reasons: because he has made some progress and because his excuse for impaired judgment and the inability to think and act clearly have passed. On his own evidence, he has no more excuses for non-compliance. I will fashion a remedy that is designed to give Mr. Sutherland-Yoest what will likely be his last opportunity to avoid having his Answer and Claim struck out and the action proceed on an uncontested basis. Furthermore, given his failure to comply with many aspects of the outstanding orders, on the return of the motion for contempt, the risk of incarceration has increased.

[56] As indicated above, Mr. Sutherland-Yoest has disclosed a policy of life insurance on his life with his wife as the designated beneficiary. However, he also apparently has an obligation to provide insurance in the face amount of $600,000 as a consequence of the General Security Agreement in favour of PR. I will make an order with respect to the existing policy to ensure that he does not alter the designation in favour of his wife.

[57] I intend to create a fresh list of obligations imposed on Mr. Sutherland-Yoest, many of which have been outstanding for over a year.

[58] As indicated above, Mr. Sutherland-Yoest delegates his litigation responsibilities to others. In an effort to ensure that he was aware of his responsibilities, in paragraph 42 of my reasons released March 5, 2012, I directed him and his then counsel to initial each page of those reasons and ensure that an initialed copy was filed in the court file. They did so. I made the same order in my endorsement dated August 3^rd^. During the course of submissions on December 7^th^, I tried to ascertain if Mr. Sutherland-Yoest and Mr. Cooper had complied with the August 3^rd^ endorsement. It appeared that they had but I have now determined that they have not. I will address that below.

[59] The part of the court file provided for the hearing of the motion on December 7, 2012 should be returned to the Family Law Office by January 3, 2013. Counsel for Mrs. Sutherland-Yoest should attend to ensure that the continuing endorsements brief and the index of documents have been brought up to date.

ORDER TO GO AS FOLLOWS:

[60] By January 11^th^, 2013 and on the 11^th^ day of each month until an order is made discontinuing the obligation, Mr. Sutherland-Yoest shall comply with paragraph 43 of the reasons for decision dated March 5, 2012, by ensuring that Mr. Durkin provides to counsel for the wife the documents and information necessary to keep the wife and her counsel informed as to the status of the joint venture. If counsel are unable to agree as to what documents and information are to be provided on a monthly basis, I will make that determination. Until such determination is made, Mr. Sutherland-Yoest shall provide the documents and information that he considers appropriate.

[61] The obligation on Mrs. Sutherland-Yoest and on her legal advisors to sign a confidentiality agreement is terminated and the last sentence of paragraph 43 of my reasons for decision dated March 5, 2012 is varied to delete that requirement.

[62] By January 11^th^, Mr. Sutherland-Yoest shall pay the outstanding costs orders, namely:

(a) Order May 24, 2012 arising from the hearing on February 9, 2012: $13,081.82

(b) Order May 24, 2012 arising from the hearing on January 26, 2012: $43,038.28

(c) Order May 24, 2012 arising from the hearing on February 16, 2012: $ 5,555.08

(d) Order May 24, 2012 arising from the hearing on May 24, 2012: $ 1,500.00

(e) Order August 17, 2012 arising from hearing on July 31, and August 3: $19,296.73.

[63] By January 11^th^, 2013, Mr. Sutherland-Yoest shall provide from Manulife Financial written confirmation with respect to the policy number listed in his financial statement sworn November 26, 2012 as to the following:

(a) Face amount of the policy and number of the policy;

(b) Name of owner;

(c) Confirmation that Mrs. Sutherland-Yoest is the sole beneficiary;

(d) Amount of the annual premium;

(e) Confirmation that the policy is in good standing and has not been pledged.

[64] Mr. Sutherland-Yoest is prohibited from changing the designation of beneficiary without written agreement of his wife or court order.

[65] By January 11^th^, 2013, Mr. Sutherland-Yoest shall provide to counsel for Mrs. Sutherland-Yoest a copy of his 2011 U.S. income tax return together with all of the attachments.

[66] By January 11^th^, 2013, Mr. Sutherland-Yoest will serve and file a copy of the reasons for decision dated August 3^rd^ and these reasons on which he and Mr. Cooper have initialed each page.

[67] By January 31^st^, 2013, Mr. Sutherland-Yoest shall ensure that a copy is provided to counsel for Mrs. Sutherland-Yoest of every document (paper or electronic) that has been provided to Linda Brent, provided that those copies are organized and indexed.

[68] By January 31^st^, 2013, Mr. Sutherland-Yoest shall serve and file a sworn financial statement and he shall comply with paragraph 10 of the consent order dated October 27, 2011, namely he shall produce all disclosure relevant to the determination of his income and net family property and without limiting the generality of this statement, he shall provide a full and complete accounting of all corporate and personal holdings, business interests and properties in which he has an interest in any jurisdiction, whether such interest is direct or indirect, legal or beneficial as at date of marriage, valuation date and date of statement.

[69] By January 31^st^, 2013, Mr. Sutherland-Yoest shall comply with paragraph 11 of the consent order made October 27, 2011 and he shall provide to counsel for Mrs. Sutherland-Yoest a copy of a report prepared by Linda Brent that reflects the contents of her report dated September 13, 2012 with the additional information about Christina.

[70] By January 31^st^, 2013, Mr. Sutherland-Yoest shall comply with paragraph 12 of the consent order made October 27, 2011 and he shall provide a report from Linda Brent that (a) accounts for the remaining $1.2 million; or (b) explains why an accounting cannot be provided.

[71] The motion to strike the Answer and Claim and the motion for contempt is adjourned to February 21, 2013 at 2:15 before me. Counsel to confirm in the usual way. That date may be changed only on the consent of counsel for Mrs. Sutherland-Yoest and subject to my availability. By February 7^th^, 2013, Mr. Sutherland-Yoest shall serve and file an affidavit in which he explains how he has complied with all aspects of this order.

[72] If by January 11^th^, 2013 the parties have not agreed as to costs of this motion up to and including December 7^th^, 2012, then counsel shall make written submissions on the following timetable:

(a) By January 21, 2013, counsel for Mrs. Sutherland-Yoest shall make written submissions not exceeding 3 pages plus costs outline;

(b) By January 28, 2013, counsel for Mr. Sutherland-Yoest shall make written submissions not exceeding 3 pages plus costs outline.

Kiteley J.

Released: December 20, 2012

[^1]: 2012 ONSC 663 (January 30, 2012); 2012 ONSC 1489 (March 5, 2012); 2012 ONSC 4534 (August 3, 2012) [^2]: Moran v. Cunningham [2009] O.J. No. 2877 (Ont. S.C.J.) at para 58, 67 and 69 [^3]: 2012 ONSC 3042 [^4]: 2012 ONSC 5601 [^5]: In her affidavit, Mrs. Sutherland-Yoest said that Christina had given the necessary consent. [^6]: Transcript page 93-94 [^7]: Transcript page 92