COURT FILE NO.: FS – 11- 372987
DATE: 20130226
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Sherry Lynne Sutherland-Yoest
Applicant
– and –
David Sutherland-Yoest
Respondent
Harold Niman and Deborah MacKenzie, for the Applicant
Morris Cooper, for the Respondent
HEARD: February 21, 2013
Kiteley J.
[1] This is the continuation of the fourth[^1] attempt on behalf of the Applicant to compel compliance with outstanding orders. I will not review the events that have transpired prior to this hearing since they are described in previous reasons. Suffice it to say that counsel for the Applicant have been trying to obtain disclosure and other relief since the fall of 2011.
[2] In reasons for decision dated December 20, 2012, I imposed conditions on Mr. Sutherland-Yoest and adjourned the motion to strike the Answer and Claim and the motion for contempt to February 21, 2013. I will start with reviewing his compliance with that order and other orders before moving to the remedy for his non-compliance.
A. Compliance
[3] Pursuant to paragraph 60, Mr. Sutherland-Yoest was required to continue to ensure that, effective January 11, 2013, corporate counsel (Mr. Durkin) provided monthly written reports as to the status of the joint venture. He did provide a status report in letters dated January 11, 2013, February 11, 2013 and February 20, 2013.
[4] Pursuant to paragraph 65, Mr. Sutherland-Yoest was required to provide by January 11, 2013 a copy of his 2011 US income tax return together with all of the attachments. Mr. Cooper provided it on January 7th.
[5] Pursuant to paragraph 67, Mr. Sutherland-Yoest was required by January 31, 2013 to provide a copy of every document (paper or electronic) that had been provided to Linda Brent. On January 31st, Mr. Cooper provided a USB stick that apparently contains all such documents.
[6] Pursuant to paragraph 69, Mr. Sutherland-Yoest was required by January 31, 2013 to comply with paragraph 11 of the consent order made October 27, 2011 and provide a further report by Linda Brent that reflected the contents of her report dated September 13, 2012 with the additional information about Christina. Mr. Cooper said that that was provided on January 18, 2013.
B. Non-Compliance
[7] Pursuant to paragraph 62, Mr. Sutherland-Yoest was required to pay five costs orders totaling $82471.91. He did not pay by January 11, 2013 as ordered. On February 21st, Mr. Cooper provided what he said was evidence of a deposit of $10000 into the account of Niman Zemans Gelgoot on February 20th. Mr. Niman was not able to confirm that the funds had been received. In the absence of such confirmation, I do not accept that he made such a payment.
[8] Pursuant to paragraph 70, Mr. Sutherland-Yoest was required by January 31st to comply with paragraph 12 of the order made October 27, 2011 and provide a report from Linda Bent that (a) accounted for the remaining $1.2 million; or (b) explained why an accounting cannot be provided. He did neither.
[9] Pursuant to paragraph 71, Mr. Sutherland-Yoest was required by February 7, 2013 – two weeks before the return of the motion – to serve and file an affidavit in which he explained how he had complied with all aspects of the order. He did not do so.
[10] At the outset of the hearing on February 21st, Mr. Sutherland-Yoest was not present. Mr. Cooper said he had arranged to meet his client at his office at 1:30 (in anticipation of a 2:15 start) but he had not arrived before Mr. Cooper had to leave his office. The hearing started without him at 2:25. At 3:04, Mr. Sutherland-Yoest arrived. We took a 5 minute recess. On resumption, Mr. Cooper said his client was late because he had fallen asleep. Mr. Cooper had prepared an affidavit explaining the status of his compliance and had had his client sign it during the recess. Ms. MacKenzie objected to the affidavit being filed so late but she did not object to Mr. Cooper filing a table that attempted to summarize the status of the December 20th orders. In summary, Mr. Sutherland-Yoest failed to comply with paragraph 71 and failed to provide an explanation for not having done as he was directed to do.
C. Partial Compliance
[11] Pursuant to paragraph 63, Mr. Sutherland-Yoest was required to provide by January 11th from Manulife Financial written confirmation with respect to the policy number listed in his financial statement sworn November 26, 2012 (namely policy #663) as to the face amount of the policy and number of the policy; the name of the owner; that Mrs. Sutherland-Yoest is the sole beneficiary; the amount of the annual premium; confirmation that the policy is in good standing and has not been pledged. In a letter dated January 10, 2013, ostensibly from Mr. Sutherland-Yoest, he confirmed the status of the Manulife policies. He identified policy #647 which had not been previously disclosed in which the death benefit was $389,088 and confirmed that the beneficiary was his wife and that the policy was paid in full and was in good standing and he noted that he had supplied the annual statement to show that his wife was still the beneficiary. He identified policy #663 which had been referred to in his financial statement where the death benefit was $600,000 and the beneficiary was his wife but the annual premium of $3830 was in arrears. He noted that he was “currently having this policy reinstated” and would “provide further details as the process moves forward”. The statement attached from Manulife Financial as of April 27, 2012 confirms the information about policy #647 but not policy #663. In a letter dated January 29, 2013, Mr. Cooper provided a summary from Manulife as of January 16, 2013 with respect to policy #647. That letter also provided a summary from Manulife with respect to policy #663 but it is as of November 8, 2011.
[12] In summary, he has not provided current confirmation from Manulife with respect to policy #663 and he has not provided “further details” as to the reinstatement of policy #663. He has not confirmed that policy #663 has not been pledged which is important given that he has provided documents that he says evidence indebtedness which required him to provide life insurance in the amount of $600,000. He has provided confirmation that policy #647 exists, but he has not provided confirmation that it has not been pledged.
[13] Pursuant to paragraph 66, Mr. Sutherland-Yoest was required by January 11th to serve and file a copy of the reasons for decision dated December 20, 2012 on which he and Mr. Cooper had initialed each page. That was done on January 17, 2013. It is in the category of Partial Compliance because, while it was done, it was done late and without explanation for the delay.
[14] Pursuant to paragraph 68, Mr. Sutherland-Yoest was required by January 31st to serve and file a sworn financial statement and comply with paragraph 10 of the consent order dated October 27, 2011, namely that he produce all disclosure relevant to the determination of his income and net family property and without limiting the generality of that statement, he was required to 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 the date of marriage, valuation date and date of statement.
[15] With no explanation for the delay, on February 12th, Mr. Cooper delivered a financial statement sworn on February 11, 2013 and notarized in New Jersey on that date. On the front of the statement, Mr. Sutherland-Yoest deposed that he was living in Los Angeles and referred to Note 1. The notes to the financial statement are dated February 7, 2013 and note 1 indicates that he was in the process of being evicted from his condominium in Los Angeles and when the eviction was finalized, he would reside with Chauncey Durkin in Jackson, New Jersey. Mr. Cooper said his client had left the rented condominium in Los Angeles and was living with Mr. Durkin. In attempting to explain the discrepancy between the residence on the financial statement and his current circumstances, Mr. Cooper said that the financial statement had been prepared in December, 2012 by Ms. Brent and that Mr. Sutherland-Yoest’s circumstances had changed since then. In that financial statement, he continues to reflect no income but has expenses totaling $52369 per month including condominium rent ($12000 per month) and furniture rent ($4500 per month) which Mr. Cooper said he no longer incurs.
[16] On pages 5 and 6 of that financial statement, he listed bank accounts including a Citigold account ending 5918 with a balance as of “today” of $20279 but he attached a statement for a Citi account ending 3030 which, as of February 7, 2013 had $20279 on deposit. There is no explanation for listing an account number but providing a statement for a different account number. He continues to show substantial indebtedness and apparently continues to finance his lifestyle through credit. On page 6, he listed the life insurance policy #663 but not policy #647. He continues to indicate “TBD” for the value of shares owned at valuation date and today. He has provided no documents to support the date of marriage assets.
[17] This financial statement is not a material improvement over the prior statement. As I noted at paragraph 48 of the reasons for decision dated January 30, 2012, Mr. Sutherland-Yoest continues to demonstrate how little attention he pays to detail when he is signing important documents and he continues to take no responsibility for the accuracy of such documents.
D. Non-Compliance with other orders
[18] In orders made October 27, 2011 and January 30, 2012, Mr. Sutherland-Yoest was required to pay the mortgage on the matrimonial home. His payment for the month of December 2012 was short $3000 and he has not paid in January or February.
[19] In the order dated August 3, 2012 I directed Mr. Sutherland-Yoest to purge his contempt by the following:
(a) By September 15, 2012 - serve and file a sworn financial statement;
(b) By September 15, 2012 – comply with paragraph 10 of the order made October 27, 2011;
(c) By September 15, 2012 – comply with paragraph 11 of the order made October 27, 2011;
(d) By September 15, 2012 – comply with paragraph 12 of the order made October 27, 2011;
(e) By August 19, 2012 – comply with paragraph 42 of the reasons for decision dated March 5, 2012;
(f) By August 19, 2012 – pay costs orders that totaled approximately $60,000 plus costs arising from that attendance.
As of February 21, 2013, Mr. Sutherland-Yoest has fully complied only with sub- paragraph (e).
Positions of the Parties
[20] Mr. Cooper takes the position that Mr. Sutherland-Yoest had substantially complied with my order dated December 20, 2012 and that the reason for breaching paragraphs 62, 70, and 71 as indicated above was that he did not have the funds to continue to retain Ms. Brent and indeed, to continue to retain Mr. Cooper.
[21] Mr. Niman and Ms. MacKenzie take the position that enough is enough. After almost 18 months of seeking disclosure and failure to comply with four prior orders, I ought to find Mr. Sutherland-Yoest in contempt again; find that he had breached my order dated December 20, 2012; direct him to purge his contempt by paying a penalty of $1500 per day from September 15, 2012 to February 21, 2013 totaling $238500 and continue to pay $1500 per day until paid in full; pay the costs which totaled $82471.91 plus costs from the attendance on December 7, 2012 and make an order striking his pleadings.
Remedy for Breach of Court Orders
[22] I will not repeat the legal principles that apply to a motion for contempt and a motion to strike pleadings to which I have referred in earlier reasons for decision.
A. Contempt
[23] There are three criteria that must be met. The first has been met in that the orders made on December 20, 2012 were clear and unequivocal. As for the second criterion, to the extent that Mr. Sutherland-Yoest failed to comply with paragraphs 62, 70, 71 and the orders made October 27, 2011 and January 30, 2012 with respect to the payment of the mortgage, I conclude that his breach was deliberate and willful, particularly since he failed to explain why he did not comply. Even if I accept Mr. Cooper’s suggestion that he did not have the funds to continue to retain Linda Brent or Mr. Cooper, I do not accept that as an excuse. As I have noted at paragraph 34 of the reasons for decision dated March 5, 2012 Mr. Sutherland-Yoest has funds for what he considers priority issues and he does not have funds for priorities set by the court. Furthermore as I indicated in paragraph 55 of the reasons for decision dated December 20, 2012, on his own evidence, Mr. Sutherland-Yoest had no more excuses for non-compliance.
[24] The third part of the test is that the evidence must show contempt beyond a reasonable doubt. Mr. Sutherland-Yoest continues to resist complying with his obligations. However, I am satisfied that Mr. Sutherland-Yoest has shown sufficient compliance with respect to paragraphs 60, 65, 67 and 69 and partial compliance with respect to paragraphs 63, 66 and 68 that his failure to fully comply does not demonstrate contempt beyond a reasonable doubt.
[25] I will not make a finding of contempt on this motion. However, as recently as August 3, 2012, I did make findings at paragraph 17 that Mr. Sutherland-Yoest was in contempt in four respects. I directed him to purge his contempt as indicated in paragraph 19 above. He has fundamentally failed to do so. He remains in contempt of court insofar as he still has failed to comply. During the hearing in July/August 2012, Ms. MacKenzie asked that I impose a penalty. At paragraph 20 of the reasons for decision dated August 3rd, I noted that I had asked Mr. Sutherland-Yoest what penalty he thought I should impose and he hesitatingly said $100,000. I observed that that was a “drop in the bucket to him” and that it demonstrated how he does not take his breaches of court orders seriously. In paragraph 26 of those reasons for decision I noted that there was some “light at the end of the tunnel”. As I indicated in the handwritten endorsement that accompanied those reasons for decision, I declined to make an order imposing a penalty at that time because I was concentrating on Mr. Sutherland-Yoest purging his contempt. I noted that if he failed to comply with any aspect of my order that I anticipated renewed submissions that a penalty should be imposed.
[26] As indicated in my reasons for decision dated December 20, 2012, Mr. Sutherland-Yoest failed to comply with the August 3rd order. That continues to this date. Mr. Sutherland-Yoest has failed to live up to his own expectations, let alone those of the court. Mrs. Sutherland-Yoest is entitled to know that consequences must be imposed for failure to comply with orders. Accordingly, I now impose a penalty for the contempt that I found in paragraph 17 of the reasons for decision dated August 3, 2012. Since Mr. Sutherland-Yoest identified $100,000 as reasonable and since I still consider that a “drop in the bucket”, I will triple it.
B. Strike Pleadings
[27] I have referred in earlier reasons to Family Law Rules 1(8), 2(2) to (4) and 14(23). I agree with counsel for Mrs. Sutherland-Yoest that Mr. Sutherland-Yoest has had over 18 months and four prior orders to comply with his obligations under the Family Law Rules. The light at the end of the tunnel that I anticipated in December 2012 has not materialized. Mr. Sutherland-Yoest’s chronic non-compliance must have consequences that demonstrate that Mrs. Sutherland-Yoest is entitled to expect that her claims will be dealt with justly.
[28] Mr. Sutherland-Yoest has failed to satisfy me why rule 14(23) ought not to apply. He has left me no choice but to strike his Answer and Claim. Rule 10(5) provides that if an answer is struck out, the respondent is not entitled to any further notice of steps in the case and not entitled to participate in the case in any way. Those are not mandatory consequences of an order striking out an Answer and Claim. The court has the discretion to impose such consequences or otherwise. I will enumerate below the rights that Mr. Sutherland-Yoest has and those that he has lost.
[29] One right that he still has is to participate in a settlement conference. Generally, the goal is to have a settlement conference that can be based on a foundation of knowledge which is predicated on comprehensive disclosure. Mr. Sutherland-Yoest has not met his obligation but based on what I have seen, it is possible to have discussions about settling the outstanding issues raised by Mrs. Sutherland-Yoest in her Application which include spousal support, equalization of net family property, unequal division of net family property, exclusive possession of the matrimonial home, damages for intentional infliction of physical and emotional harm during the marriage and damages for emotional harm following separation. As indicated below, I will direct a settlement conference on certain terms designed to be as productive as possible.
Costs of the motion heard on December 7, 2012 and on February 21, 2013
[30] Following the attendance on December 7th, counsel made written submissions as to costs. Counsel for Mrs. Sutherland-Yoest asked for $22,813.57. In his response, Mr. Cooper indicated that Mr. Sutherland-Yoest had an obligation to pay reasonable costs but the amount claimed was egregious and over-reaching, without regard to the principles of proportionality, reasonable expectations as to costs and the limited nature of the determination made in the reasons arising from that attendance. He took the position that a reasonable order would be that Mr. Sutherland-Yoest should pay costs of $7500 plus disbursements as claimed, plus HST. He also noted that “having regard to the exchange of Offers to Settle these costs”, that any costs associated with the preparation and determination of the costs be reserved to the conclusion of the hearing on February 21st.
[31] At the conclusion of the hearing on February 21, 2013, Ms. MacKenzie provided a costs outline which reflected full indemnity costs in the amount of $10,667.77 (including HST) up to February 21st but not including the ½ day attendance on the motion. Mr. Cooper acknowledged that Mr. Sutherland-Yoest was responsible to pay reasonable costs but he challenged the need for two senior counsel and time spent on reviewing documents. Mr. Cooper suggested that the costs not exceed $5000 plus HST. He made no submission about any offers to settle costs from which I infer that such offers were not relevant.
[32] The attendance on December 7th was the continuation of the hearing in July/August. It is the case that Mr. Niman asked that the motion for contempt be adjourned because the report of Linda Brent that was a key outcome which had been sought since October, 2011 had been provided literally on the eve of the December 7th attendance. Each time there is an attendance to compel compliance, considerable effort must be made on behalf of Mrs. Sutherland-Yoest to bring the court up-to-date as to what has and has not transpired.
[33] The moving party has been successful in an important milestone, namely striking Mr. Sutherland-Yoest’s Answer and Claim. I am satisfied that he must pay costs on a full indemnity basis. I recognize that the costs outlines reflect services of two senior counsel. However, I also note that a consider portion of the work is typically done by Ms. Vartanian (Law Clerk) at a more modest rate. I accept the costs outline for December 7th and fix those costs at $22,813.57 including fees, disbursements and HST. I accept the costs outline for February 21st and I add a counsel fee for two counsel for ½ day for submissions bringing the total to $15000.00 including HST.
ORDER TO GO AS FOLLOWS:
[34] The Answer and Claim filed on behalf of Mr. Sutherland-Yoest is struck out.
[35] The Applicant is at liberty to arrange a date for an uncontested trial provided that the date is at least 30 days after the settlement conference referred to below.
[36] As a consequence of the contempt described in paragraph 17 (a), (b), (c) and (d) of the reasons for decision dated August 3, 2012 and as a consequence of his failure to purge his contempt in accordance with paragraph 29, 30, 21, 32 and 34 of those reasons for decision, Mr. Sutherland-Yoest shall pay a penalty to Mrs. Sutherland-Yoest in the amount of $300,000 CDN.
[37] Mr. Sutherland-Yoest shall pay costs of the motion heard on December 7, 2012 fixed in the amount of $22,813.57 including HST and costs of the motion heard on February 21, 2013 fixed in the amount of $15000 including HST.
[38] Pursuant to paragraph 4 of the order made October 27, 2011 Mr. Sutherland-Yoest shall continue to pay the monthly payment required on the mortgage registered against title to the matrimonial home.
[39] With respect to paragraph 10 of the order made October 27, 2011 and paragraph 68 of the reasons for decision dated December 20, 2012, Mr. Sutherland-Yoest shall comply by March 28, 2013.
[40] With respect to paragraph 12 of the order made October 27, 2011 and paragraph 70 of the reasons for decision dated December 20, 2012, Mr. Sutherland-Yoest shall comply by March 28, 2013.
[41] Mr. Sutherland-Yoest shall continue to comply with paragraph 60 of the reasons for decision dated December 20, 2012.
[42] In these proceedings, Mr. Sutherland-Yoest has the right:
(a) To attend and participate in a settlement conference on the conditions set out below;
(b) To receive notice of any step in the proceeding taken by Mrs. Sutherland-Yoest;
(c) To attend any step in the proceeding (including the trial) as an observer;
(d) To make closing submissions at the trial, with leave of the trial judge.
[43] In these proceedings, Mr. Sutherland-Yoest does not have the right:
(a) To bring any motion or application;
(b) To question Mrs. Sutherland-Yoest or any other person;
(c) To seek disclosure from Mrs. Sutherland-Yoest or any other person;
(d) To participate in any step in the proceeding except as described above.
[44] A Settlement Conference will be held by Czutrin J. on Monday June 3, 2013 from 2:30 to 4:30 on these conditions:
(a) By Friday, April 19, 2013 Mr. Sutherland-Yoest shall pay the costs referred to above in the amount of $82,471.91 plus costs of the motion heard on December 7, 2012 in the amount of $22,813.57 plus costs of this motion fixed at $15000 including HST.
(b) Mr. Sutherland-Yoest shall comply with paragraphs 38, 39, 40 and 41 above.
(c) By Friday May 3, 2013 Mrs. Sutherland-Yoest shall serve and file an up-to-date sworn financial statement; a net family property statement; a settlement conference brief; and an offer to settle all issues.
(d) By Friday, May 17, 2013 Mr. Sutherland-Yoest shall serve and file an up-to-date sworn financial statement; a net family property statement; a settlement conference brief; and an offer to settle all issues.
(e) Mr. Sutherland-Yoest is not required to pay the penalty prior to the settlement conference. Post-judgment interest applies to the payment of the penalty in the amount of $300,000.
(f) If Mr. Sutherland-Yoest fails to comply with (a), (b) or (d), counsel for Mrs. Sutherland-Yoest may cancel the settlement conference.
[45] By March 8, 2013 Mr. Sutherland-Yoest shall provide from Manulife Financial written confirmation with respect to policy #647 that it has not been pledged and that Mrs. Sutherland-Yoest is the sole beneficiary.
[46] By March 8, 2013, Mr. Sutherland-Yoest shall provide from Manulife Financial written confirmation with respect to policy #663 that it has been reinstated, that it has not been pledged, and that Mrs. Sutherland-Yoest is the sole beneficiary.
Kiteley J.
Released: February 26, 2013
COURT FILE NO.: FS – 11- 372987
DATE: 20130226
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Sherry Lynne Sutherland-Yoest
Applicant
– and –
David Sutherland-Yoest
Respondent
REASONS FOR JUDGMENT
Kiteley J.
Released: February 26, 2013
[^1]: 2012 ONSC 633 (January 30, 2012); 2012 ONSC 1489 (March 5, 2012): 2012 ONSC 4534 (August 3, 2012) and 20120 ONSC 7177 (December 20, 2012)