Court File and Parties

COURT FILE NO.: FC-11-37177-00

DATE: 20130402

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Sheree Smith, Applicant

AND:

Ermanno Torelli, Respondent

BEFORE: The Honourable Mr. Justice C. Nelson

COUNSEL: Dani Z. Frodis, for the Applicant

Lorne H. Wolfson, for the Respondent

HEARD: February 20, 2013

ENDORSEMENT

Issue

[1] This is a motion by the Applicant/mother for disclosure of financial information from the Respondent/father in relation to a claim for retroactive child support for two children. The disclosure being sought dates from 1995. The Respondent resists the order sought by the Applicant, arguing that the Applicant has not established entitlement to child support for the years prior to 2007. The Respondent submits that in the circumstances of this case, establishing entitlement should be a threshold issue. By way of cross-motion, the Respondent seeks an order, pursuant to Rule 12(5) of the Family Law Rules, O. Reg. 114/99, severing the issue of entitlement for the years 1995-2007 and ordering that a trial first be held on that issue before dealing with disclosure. On consent, the parties agree that the Respondent’s motion for severance would be argued first, followed by the Applicant’s motion for disclosure.

[2] The core of the Respondent’s argument rests on the proposition that the Applicant is not entitled to child support retroactive to 1995 based on the factors enunciated by the Supreme Court of Canada in D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231 [“D.B.S.”]. The Respondent concedes that the Applicant is entitled to financial disclosure from 2007 onwards as she first made a formal request for disclosure in relation to this application in 2010. The Respondent submits that the issue of entitlement ought to be severed, and a trial ought to be held on that issue. Against this backdrop, the issues raised by D.B.S. require exploration in order to decide whether to sever this issue of entitlement, and ultimately, whether to order disclosure.

Background

[3] The Applicant, Sheree Smith, and the Respondent, Ermanno Torelli, are the parents of two children: Daniel Joseph Smith (“Daniel”), born September 24, 1995; and Darnella Smith (“Darnella”), born February 16, 1999.

[4] The Applicant was born in Kingston, Jamaica, in 1968. She moved to Canada at 22 years of age with the three children she had at that time. The Respondent was born in Italy in 1946 and moved to Canada when he was 18 years old. He is an entrepreneur and started his own company in 1985. It appears that the Respondent may have accumulated significant wealth since that time.

[5] The parties met in the early 1990s and commenced a sexual relationship. They have never cohabited. Indeed, throughout the relationship, the Respondent was married and had his own family. The Respondent paints the relationship as an insignificant, sexual one. He says that when he met the Applicant she said she was a prostitute. Their initial meeting was a chance encounter as the Respondent was leaving a stag party. When he was stopped at a red light, the Applicant came to the passenger window of his car and asked for a ride. Feeling badly for her, the Respondent deposes that he agreed to give her a ride home. On the drive home, the Applicant began to make sexual advances towards the Respondent. According to the Respondent, he had been drinking and his judgment was impaired. They then had sex in a parking lot behind an apartment building. The Respondent states that the Applicant contacted him at his office a few months later and told him she was pregnant. He maintains that they agreed that she would have an abortion, and that he gave her $1,500.00 to obtain one. The Respondent asserts that she called a few weeks later, stating that she had not had an abortion and that, being pregnant, she could no longer work as a prostitute and would require money to support herself and her children.

[6] The Applicant paints a different picture of the relationship. She contends that she loved the Respondent and thought of him as her boyfriend. She recounts the first time they met as being a chance encounter at a store below the apartment in which she was living. She asked the Respondent for a light for her cigarette; he obliged, and they struck up conversation. He asked for her phone number and called later that week. He continued to call and drop by thereafter. She claims that they began “dating,” and, although she had no way to contact the Respondent, he would call her and drop by her home. She states that he told her that he was a business man who lived in the United States, but came to Toronto frequently for business. When she first became pregnant with the Respondent’s child in 1994, he asked her to terminate the pregnancy and she did. In 1995 she became pregnant again but decided to keep the child. She maintains that, throughout that pregnancy, the Respondent continued to visit her at her home.

[7] To say that the parties’ description of the relationship and its origins are in conflict is an obvious understatement. The affidavit evidence conflicts on these issues. But, whatever the genesis of the relationship, and whatever significance the parties attached to the relationship, the relevant point is that they are the parents of two children – Daniel, who was born in 1995; and Darnella, who was born in 1998. It is the support of these two children that is the subject of this application. There is no question raised about paternity.

[8] After the birth of Daniel in 1995, the Respondent began to give the Applicant about $600.00 a month for Daniel’s support. The Respondent states that he wanted to put a more formal child support arrangement in place and encouraged the Applicant to speak to a lawyer about doing so, but she refused. According to him, he had his lawyer visit the Applicant to discuss child support arrangements with her. The Applicant, however, contends that while the lawyer dropped money off a few times, the lawyer never wrote her letters, provided her with any financial disclosure, or discussed her right to claim child support. After Darnella was born, the Respondent’s payments to the Applicant increased to about $1,200.00 a month. The Applicant’s position, however, was that the Respondent’s initial payments were sporadic.

[9] In his affidavit, the Respondent states he has provided funds to the Applicant in addition to these monthly payments. He says that he gave her funds to purchase a new home in a better neighbourhood shortly after Daniel’s birth and, in 2007, he gave her funds to purchase a new condominium. He deposes that he also made other payments to the Applicant when she requested them. According to the Respondent these additional payments (together with cash) total over $1,500,000.00. However, the Respondent has no clear record of this. The Respondent’s position is that he had no choice but to give her additional money when she demanded it because she was blackmailing him by threatening to disclose their affair to his wife. The Applicant acknowledges that additional payments were made, but her position is that they were far less than 1.5 million dollars. She concedes receiving about $330,000.00 since 1995.

[10] Since June 2007 the Respondent has been transferring $3,500.00 to the Applicant twice monthly. Additionally, the Respondent has been paying for the children’s private school tuition, school uniforms, orthodontic work, optical expenses, and other s. 7 expenses since June 2007. There is no written agreement or court order respecting this arrangement.

[11] In her affidavit, the Applicant states that she had no idea of the Respondent’s wealth for many years and still does not know the extent of it. She asserts that she had no idea what he did and had no opportunity to observe his lifestyle as they only saw each other at her home, in his car, or at motels. She recounts the Respondent crying after Darnella’s birth saying that he could only pay for one child and asking her to give Darnella up for adoption. She recounts another time when the Respondent showed up at her home driving a snowplough, saying that he had to work evenings and weekends ploughing snow to support her and her children. She also tells about a time when the Respondent told her that he had to borrow money from the mafia and that he would end up dead if he did not pay it back. He showed her a gun and some money in his car. The Applicant deposes that she assumed the gun was related to borrowing money from the mafia and that she felt afraid. The Respondent states that sometime near the beginning of the relationship, the Applicant saw him in an expensive vehicle. He also states that she took one of his business cards from a car. It is the Respondent’s position that the Applicant has been aware that he was a person of some financial means.

[12] In May of 2009, there was an incident during which, according to the Respondent, the Applicant attended at the Respondent’s office demanding the sum of $45,000.00. According to the Respondent’s account of the events, the Applicant became enraged when he refused. She then followed him home and told his wife about the affair. This led to heated exchanges and the police had to be called to keep the peace.

[13] The Applicant deposes that when she met with the Respondent in May 2009 she was seeking $30.00 for a class trip for Darnella and help paying the gas bill. She says that the Respondent stated that he was “fed up” with giving her money and invited her to follow him home. She contends that attending at the home was the first time she learned that the Respondent was wealthy. She observed his large home with a Mercedes parked in the driveway. The Applicant alleges that it was only then that she realized that the Respondent had been lying to her for many years about his financial situation.

[14] Over the next year, the Applicant contends that she and the Respondent continued to see each other romantically and she continued to seek money for expenses from the Respondent. She states that in the period between 2007 and 2010 she spoke with someone at the firm representing the Respondent regularly when she needed money for bills or school programs for the children. On August 16, 2010, she states that she received a letter from counsel for the Respondent requesting that she stop making financial requests of the Respondent and the firm. Upon receipt of that letter she called the law firm acting for the Respondent. She spoke with a receptionist at the firm who told her she ought to get her own lawyer. She says that this was the first time anyone at the firm suggested she get a lawyer. Indeed, she states that the Respondent himself told her not to get a lawyer or the bi-weekly payments she had been receiving since 2007 would stop. The Applicant did retain a lawyer in August 2010, and, on August 18, 2010, her lawyer sent a disclosure request to counsel for the Respondent. On January 20, 2011, she brought an application seeking child support retroactive to 2004. On February 28, 2012, she amended the application seeking child support retroactive to the birth of the first child, Daniel, in 1995.

[15] In connection with that application, the Applicant now seeks disclosure from 1995. In particular, she seeks an order for disclosure requiring the Respondent to produce:

a) Copies of his personal income tax returns and notices of assessment and reassessment for each year from 1995 to 2007;

b) Copies of his wife’s personal income tax returns, notices of assessment, notices of reassessment and T4’s for each year from 1995-present;

c) A list of all companies the he has had an interest in since 1995, and for each of those companies:

i. The articles of incorporation/registration of the business name;

ii. Information about the ownership structure;

iii. Detailed information about all holdings, and subsidiary and affiliated companies, including financial details for each;

iv. Corporate tax returns for each year from 1995-present;

v. Balance sheets and financial statements for each year from 1995-present;

vi. Detailed payroll information, especially for non-arms length employees from 1995 to present;

d) A list of all property owned by him and his wife, including proof of ownership and any income or expenses received in relation to the property including gross rental income for each year from 1995-present; and,

e) Detailed information about the shareholdings of the Respondent and his wife from 1995 onwards.

[16] The Respondent resists the order sought by the Applicant. The Respondent submits that the Applicant has not established entitlement to child support for the years 1995-2007. As stated earlier, the Respondent concedes that he must disclose the information sought from 2007 as that date is three years from the date the Applicant contacted the Respondent in relation to this lawsuit, and, therefore, falls within the parameters of D.B.S. He seeks an order, pursuant to Rule 12(5) of the Family Law Rules, O. Reg. 114/99, severing the issue of entitlement and ordering that a trial first be held on that issue before dealing with disclosure.

Analysis

I) Retroactive Child Support

In D.B.S. the Supreme Court of Canada held that, when determining whether a retroactive child support award is appropriate, the court should strive for a holistic view of the case and consider all relevant factors (para. 99). While entitlement to a retroactive award should not be presumed, it should not necessarily be a rare event either. The court emphasized that while retroactive awards may not be appropriate in some circumstances, they need not be seen as exceptional orders (para. 97). The court held that the following four factors should be considered before awarding retroactive child support (para. 99):

a) The recipient’s excuse for not seeking support sooner;

b) The payor’s conduct in relation to his or her support obligation;

c) The circumstances of the children; and,

d) The hardship to the payor of a retroactive award.

[17] None of these factors are decisive.

[18] Generally speaking, where ordered, an award should be retroactive to the date the recipient parent gave the payor parent “effective notice” of his or her intention to seek increased support (paras. 5 and 121). “Effective notice” refers to “any indication by the recipient parent that child support should be paid, or… re-negotiated.” Legal action is not required ( para. 121).

[19] However, the court also held that a prolonged period of inactivity on the part of the recipient parent after giving effective notice brings the importance of the payor parent’s interest in certainty back to the forefront of the analysis. Thus, the court held that “in general… it will usually be inappropriate to make a support award retroactive to a date more than three years before formal notice was given to the payor parent (at para. 123, emphasis added).” The court found, however, that the date when increased support should have been paid will sometimes be a more appropriate date from which the retroactive order should start. Most notably, this situation arises where the payor parent engages in blameworthy conduct (at para. 124).

Application of the D.B.S. Factors

[20] The essence of the Respondent’s position is that a trial on the threshold issue of entitlement to child support for the years 1995-2007 ought to proceed before disclosure is ordered for that period. The Respondent’s position is that the D.B.S. factors militate against an award of retroactive child support. Further, even if a retroactive award is found to be appropriate, the general rule is that an award should not be made retroactive for more than three years prior to the date formal notice was given to the payor. As the Respondent’s position is that formal notice was given in August 2010, he submits that a claim for child support retroactive to the years before 2007 cannot be sustained.

Blameworthy Conduct

[21] Counsel for the Respondent submits that his client has not engaged in any blameworthy conduct. He submits that the Respondent tried to put a formal support arrangement in place by advising the Applicant to contact a lawyer and having his lawyer contact her. He submits that it would be inequitable prior to trial to presume entitlement for the years in which the Applicant refused to formalize a support arrangement. Further, in oral argument counsel for the Respondent submitted that there is no evidence that the Respondent threatened or misled the Applicant. He maintains that the Respondent always gave the Applicant the amounts she requested. As well, he submits that case law would indicate that even where there is blameworthy conduct, there are circumstances in which retroactive support should not be awarded.

[22] The Applicant’s position is that the Respondent did, indeed, mislead her into thinking that he made less money than he did. He frequently complained that he could not afford to pay for the support of two children, told her that had to work nights and weekends driving a snowplough, and told her that he had to borrow money from the mafia to support her and her children. Further, it is her position that they were in constant disagreement about what the Respondent would pay for and that, until recently, the Respondent’s payments were irregular.

[23] The Supreme Court has held that courts should take “an expansive view” of what constitutes blameworthy conduct in the context of retroactive child support. In D.B.S. the court defined blameworthy conduct as “anything that privileges the payor parent’s own interests over his/her children’s right to an appropriate amount of support (para. 106).” In particular, the court noted that a payor cannot hide income increases from the recipient parent in the hope of avoiding larger child support payments (para. 106).

[24] Further, in D.B.S., the Supreme Court explained that objective indicators may be helpful in determining whether a payor engaged in blameworthy conduct. In particular, the court noted, at para. 108:

the existence of a reasonably held belief that (s)he is meeting his/her support obligations may be a good indicator of whether or not the payor parent is engaging in blameworthy conduct. In this context, a court could compare how much the payor parent should have been paying and how much (s)he actually did pay; generally, the closer the two amounts, the more reasonable the payor parent's belief that his/her obligations were being met.

[25] Additionally, the court noted that the conduct of a payor parent could militate against a retroactive award where the conduct by the payor parent has had the effect of fulfilling his/her support obligation (para. 109). In particular, the court noted that a parent who contributed to expenses beyond his or her statutory obligation may have adequately fulfilled his or her support obligation (para. 109).

[26] It is clear from the court’s discussion in D.B.S. that the blameworthy conduct ought not to be assessed in a factual vacuum. Objective indicators have a role to play. In particular, where a payor has been paying support, assessing the support paid against what the payor ought to have been paying may be an important indicator of whether the payor engaged in blameworthy conduct. Conversely, it may also provide an indication of whether the payor parent was actually fulfilling his or her support obligation. It may be the case, as the counsel for the Respondent submits, that the Respondent father has not engaged in any blameworthy conduct as described in D.B.S.. I note, however, that if the Applicant’s version of the events is correct, and the Respondent did hide his true income from her, the Respondent may well have engaged in blameworthy conduct. Further, I agree with the Applicant’s submission that it is impossible to adequately assess whether the Respondent engaged in any blameworthy conduct without disclosure of his financial information. In order to compare the support paid with what the payor ought to have been paying, the court must know what the Respondent’s income was in the applicable years.

[27] Counsel for the Respondent argued in oral submissions that merely paying less than one owed under the Child Support Guidelines is not, in and of itself, blameworthy conduct. While I recognize that paying less support than should have been paid is only an indicator of blameworthy conduct, in light of the court’s emphasis in D.B.S. of the need for courts to take a holistic approach, it is important that the court (and the parties) have all relevant evidence before them. Further, even if the issue of entitlement was severed and a trial ordered on that issue alone, it seems to me that the payor’s income for the relevant period would be information the trial judge would want so that he or she could fully assess whether there was any blameworthy conduct.

Delay

[28] The Respondent submits that any delay occasioned in starting an application was entirely the result of the Applicant’s conduct. He submits that she was aware of her ability to pursue child support, as well as her legal obligation to do so, as she was a recipient of Ontario Works (social assistance payments). He submits further that her reason for not seeking support sooner was solely to deceive Ontario Works so that she could continue to receive income from social assistance. He points out that she admits to lying to Ontario Works about the child support she was receiving. The Respondent relies on the Ontario Court of Appeal decision in Cassidy v. McNeil, 2010 ONCA 218, for the proposition that delay will not be excused where a decision not to pursue support is a tactical decision by the recipient. The Respondent’s position is that the Applicant’s decision not to pursue child support was purely tactical: it allowed her to continue to collect money from Ontario Works and from the Respondent as she needed it.

[29] I do not read the Cassidy decision as broadly as does counsel for the Respondent. Cassidy involved a claim for retroactive child support for the period between separation and trial. The parties had no interim agreement, but the mother had been contributing to expenses for the children. The Court of Appeal upheld the trial judge’s interpretation of the parties’ conduct as evidence of an informal agreement. The Court of Appeal stated that “it may be a fair assumption that both parties were counselled by the lawyers to ‘standstill’ on the issues of spousal and child support because a demand for one may well have triggered a demand for the other (at para. 47).” On this basis, the court held that it was open to the trial judge to interpret the parties’ conduct as evidence of informal agreement to maintain the status quo. However, the Court did not go so far to as to say that delay will not be excused when the delay has been found to be tactical. The court found that, on the facts of that case, it was open to the trial judge to conclude that there was an informal agreement.

[30] If I am wrong in my reading of Cassidy, I find the facts of Cassidy are distinguishable from those of the case at bar. In Cassidy the parties were engaged in a negotiation process in the context of an ongoing divorce proceeding. The parties had been married for 23 years and would have had basic knowledge of each other’s employment, income, and basic financial means. It was not a case such as the one before me, in which the recipient parent had no idea of the payor’s means. Moreover, I note that the Applicant’s position in this case is that she had no understanding of the child support regime and did not have a lawyer until 2010. Even if her delay was “tactical” in some sense of the term, it was not the same kind of litigation strategy commented on by the Court of Appeal in Cassidy.

[31] The Respondent also argues that the Applicant acquiesced in the status quo arrangements. As a result, he submits, she cannot now claim retroactive support for the period during which she acquiesced. The Respondent relies on the Alberta Court of Appeal decision in Hojnik v. Hojnik, 2010 ABCA 192, 81 R.F.L. (6th) 288, for the proposition that a support recipient’s delay will not be tolerated in circumstances in which the recipient acquiesces to the support arrangements proposed by the support payor.

[32] Again, I find Hojnik distinguishable from the case at bar. In Hojnik, the parties had been married, the mother knew what the payor father did for a living, and she had a rough idea of his income (although she did not know the amount of his yearly bonuses). This was not a case, such as the one before the court now, in which the recipient parent had little, if any, sense of the means of the payor. It seems to me that to acquiesce, the Applicant would have to have some idea of the circumstances to which she was acquiescing. Had she been aware of the Respondent’s financial circumstances in 1995 and simply accepted the support he paid without complaint, the Respondent’s case would be a stronger one. In her affidavit the Applicant asserts that she had no idea of the extent of the Respondent’s wealth until 2009. She states that he mislead her into believing that he had to drive a snow plough and borrow from loan sharks even to provide the support for the children that he paid. Further, I note that while the “agreement” in Hojnik was an informal one, the parties had engaged in something resembling a negotiation process. The father had sent detailed letters to the mother about the changes he proposed to support the children and why he thought they were appropriate. In the case of one of the children, the mother responded by sending a letter outlining the expenses the father was to pay under his proposal. On the evidence before me, it is clear that a similar process of negotiation did not occur here. While the Respondent contends that he sent his lawyer to speak with the Applicant regarding child support, the Applicant states that the lawyer only ever attended to drop off money and never discussed child support with her.

[33] Most importantly, while both Cassidy and Hojnik may ultimately have some relevance to this issue of whether retroactive child support should be ordered in this case, I do not find them particularly helpful in determining the matter before this court; that is, whether a bifurcation of issues should be ordered before disclosure. Both Hokjnik and Cassidy are decisions made on appeal following viva voce hearings on the substantive issues. A trial judge may well find, after hearing all of the facts, pieced together after a full discovery process, that these cases are factually on point and that the Applicant’s claim for retroactive support ought to fail. However, at this early stage, I am not prepared find that disclosure should not be ordered based on these two authorities.

Circumstances Of The Children & Hardship To The Payor

[34] In oral argument, the parties focused primarily on the issues of blameworthy conduct and delay, making only brief submissions on the remaining factors. The Respondent does submit, however, that the children are currently enjoying a high standard of living and that they enjoyed a similar standard during their younger years. Currently, they are attending private school, enjoy vacations, and are involved in extra-curricular activities. The Respondent cites D.B.S., at para. 105, where Justice Bastarache noted that a child who is currently enjoying a relatively high standard of living may benefit less from a retroactive award. In D.B.S. Justice Basterache explained that the argument for retroactive child support will be less convincing when the child is already enjoying all the advantages s(he) would have received with both parents supporting him or her. In terms of hardship to the payor, the counsel for the Respondent submits that the Respondent is semi-retired, and must live off the assets in his name of approximately $1.2 million. If a retroactive award is made, he will have to encroach on his capital. This will result in hardship in light of his semi-retired status.

[35] The affidavit evidence before me does suggest that the children are enjoying a relatively high standard of living at present. However, the evidence also suggests that the children have not always enjoyed this high standard of living. The Applicant and her children lived in social housing up until 2005 and often visited food banks. The Applicant asserts that she often struggled to make ends meet. I note that, at para. 113, of D.B.S., Justice Basterache explained the following in relation to the circumstances of the children:

Because the awards contemplated are retroactive, it is also worth considering the child’s needs at the time the support should have been paid. A child who underwent hardship in the past may be compensated for this unfortunate circumstance through a retroactive award. On the other hand, the argument for retroactive child support will be less convincing where the child already enjoyed all the advantages (s)he would have received had both parents been supporting him/her: see S. (L.). This is not to suggest that the payor parent’s obligation will disappear where his/her children do not “need” his/her financial support. Nor do I believe trial judges should delve into the past to remedy all old familial injustices through child support awards; for instance, hardship suffered by other family members (like recipient parents forced to make additional sacrifices) are irrelevant in determining whether retroactive support should be owed to the child. I offer these comments only to state that the hardship suffered by children can affect the determination of whether the unfulfilled obligation should be enforced for their benefit. [Emphasis added.]

[36] The fact, then, that the children are, or may be, enjoying a high standard of living currently is not decisive in the D.B.S. analysis.

[37] I would also note that in D.B.S., the court emphasized that courts need to take a holistic approach, and consider all of the factors in deciding whether a retroactive support award is appropriate. No single factor is decisive. A trial judge may well find that the Applicant’s delay in seeking support was unreasonable, or that the circumstances of the children are such that a retroactive award is inappropriate, or that the hardship to the payor would be too great to justify an award, but these factors cannot be considered in isolation from each other. To adequately apply the D.B.S. framework blameworthy conduct must also be explored. And, as outlined above, blameworthy conduct cannot be assessed without exploring the Respondent’s income in the applicable years.

Date of Retroactivity

[38] The Respondent relies on D.B.S. where, at para. 123, the court stated that, as a rough guideline, “it will usually be inappropriate to make a support award retroactive to a date more than three years before formal notice was given to the payor parent.” It is the Respondent’s position that the date of notice was August 18, 2010, that being the day the Applicant’s recently retained lawyer wrote to the Respondent’s lawyer requesting that he provide financial disclosure. It is the Responedent’s position that, at this early stage of the case, the Applicant is only entitled to make a claim going back three years from that date. That is, he submits that she is only entitled to claim child support retroactive to 2007. Anything beyond that is a threshold matter that should require its own determination at a separate trial, especially given all of the other D.B.S. factors.

[39] In D.B.S. the court did indeed hold that as a general guideline it will usually be inappropriate to make a support award retroactive to a date more than three years before formal notice was given to the payor parent. However, the court continued, at para. 124:

The date when increased support should have been paid, however, will sometimes be a more appropriate date from which the retroactive order should start. This situation can most notably arise where the payor parent engages in blameworthy conduct. Once the payor parent engages in such conduct, there can be no claim that (s)he reasonably believed his/her child's support entitlement was being met. This will not only be the case where the payor parent intimidates and lies to the recipient parent, but also where (s)he withholds information. Not disclosing a material change in circumstances -- including an increase in income that one would expect to alter the amount of child support payable -- is itself blameworthy conduct. The presence of such blameworthy conduct will move the presumptive date of retroactivity back to the time when circumstances changed materially. A payor parent cannot use his/her informational advantage to justify his/her deficient child support payments [Emphasis Added].

[40] While this comment relates to possible changes in an original order, it should also apply, it seems to me, to a de facto arrangement. The onus is on the payor to honestly disclosure his financial circumstances.

[41] Blameworthy conduct thus comes into the analysis again for determining the date of retroactivity. In particular, the presence of blameworthy conduct may push the presumptive date of retroactivity back to a date when the payor ought to have been paying more support or even something approximating appropriate support. Thus, the “three years from formal notice rule” relied on by counsel for the Respondent is not a hard and fast rule. However, in order to deal with this issue, the court must know the Respondent’s income for that period, because one of the main objective indicators of blameworthy conduct is a comparison of how much the payor parent should have been paying with how much he actually did paid. I therefore accept the Applicant’s submission that the court can neither determine whether a retroactive award should be made, nor the date of retroactivity, without of the benefit of financial disclosure. The court needs to know the Respondent’s income for the period of 1995 onwards to adequately assess whether or not the Respondent engaged in any blameworthy conduct.

Bifurcated Trial

[42] The court has inherent jurisdiction to sever issues to be tried where it would be just to do so. This jurisdiction is codified in Family Law Rule 12(5), which provides:

[43] If it would be more convenient to hear two or more cases, claims or issues together or to split a case into two or more separate cases, claims or issues, the court may, on motion, order accordingly.

[44] As the Ontario Superior Court explained in Simioni v. Simioni, (2009) 2009 934 (ON SC), 74 R.F.L. (6th) 202 at para. 15, this power ought to be exercised where it is convenient and where it would be in the interests of justice to do so. The interests of justice will be served where “there are clear time and expense benefits to be gained from the bifurcation and determination of the threshold issue, provided no real or meaningful prejudice is caused to either party (para. 16).” However, the court also explained, at para. 16:

it is equally important to remember that the splitting of a trial effectively denies the fundamental principle that as far as possible, multiplicities of proceedings are to be avoided, and thus the power to split a case should be regarded as one that is narrowly circumscribed and to be exercised in only the clearest of cases — in cases that exhibit the exceptional merit that calls upon the Court to exercise its inherent power. [Citations omitted].

[45] In light of the exceptional nature of the order, the onus lies upon the party seeking bifurcation to satisfy the court on a balance of probabilities that, if granted, severance will result in the “just, expeditious and least expensive determination of the proceeding on its merits:” Simioni, at para. 17. The onus then is on the Respondent to show that a trial of the issue of entitlement to retroactive child support for the years 1995-2007, before providing financial disclosure for that period, will result in the just, expeditious, and least expensive determination of this proceeding on its merits. Once that burden is met, it is up to the Applicant to demonstrate real prejudice that outweighs any such expediency.

[46] The thrust of the Respondent’s argument on bifurcation is that severing the issue of entitlement for the years prior to 2007 could generate savings in terms of time and expense because the Respondent would not need to provide disclosure or determine his income for those years, and, if no entitlement is found, the issues in the main application would be narrowed substantially. In particular, the Respondent submits that significant professional fees would have to be spent to respond to the Applicant’s request for disclosure. He submits that the cost for an accountant alone to do an income analysis would be approximately $100,000.00. Counsel for the Respondent submits further that if the issue is not severed, the Respondent will also be forced to account for all of the payments he made during that time to the Applicant. This will involve significant time and expense as neither party has any record of the amounts paid. During oral submissions, counsel for the Applicant disputed that figure of $100,000.00 relied on by the Respondent, stating that the estimate provided was $40,000.00 plus HST. Indeed the Respondent’s affidavit provides that an accountant’s estimate was that it would cost $40,000.00 for an income analysis for the years 1995-2011.

[47] The Respondent relies on a number of Ontario cases where the courts have severed “preliminary” or “threshold” issues before requiring a spouse to make significant financial disclosure: Mantella v. Mantella, 2006 10526 (ON SC), [2006] O.J. No. 1337 (S.C.J.), at para. 64; Johnson v. Johnson, 1986 6256 (ON SC), [1986] O.J. No. 2506 (H.C.), at para. 17; Marton v. Marton, [1988] O.J. No. 1358 (H.C.), at p. 5. The Respondent also relies on the Ontario Superior Court decision in J.L.L. v. S.B.L., [2006] O.J. No. 1703 (S.C.J.) as an example of a case in which bifurcation was used to resolve a threshold issue that would eliminate the second stage of the application.

[48] J.L.L. v. S.B.L involved an application for a change in a custody and access order wherein the court had to consider whether access should be terminated because the access parent had been diagnosed with a serious mental disorder. The application was bifurcated so that if the court were to conclude, at the first stage, that the diagnosis was incorrect and access should continue, the next stage would be whether access should be supervised. While this case does indeed provide an example of bifurcation, the facts and issues in that case were so fundamentally different from the facts in the case at bar, that I do not find it particularly helpful.

[49] The remaining cases relied on by the Respondent are all cases in which the validity of separation agreements was severed and tried before support, property, or other issues were to be determined. It is of some interest to note that none of these cases deal with the issue of severance with respect to entitlement where retroactive child support is an issue. In fact, counsel has advised that their research would seem to indicate that there are no cases directly on point.

[50] I do not find the cases severing the issue of the validity of a separation agreement particularly helpful. The validity of a separation agreement is a threshold issue that revolves around the determination of different facts (usually the circumstances surrounding the making of the agreement) and the application of different legal principles (unconscionability, mistake, and so on) from subsequent issues of support or property division (which relate largely to current financial circumstances). In the case at bar, the Respondent is asking the court to order separate trials on the same issue: retroactive child support, albeit for different periods. It seems to me that a trial on the issue of whether there is entitlement for the period of 1995-2007 would look very similar to a trial on the issue from 2007 onwards. The factors to consider in both cases would be those identified in D.B.S.: was the recipients delay unreasonable; did the payor engage in blameworthy conduct; do the circumstances of the children favour an award; would there be unreasonable hardship to the payor; when did the payor parent have effective and formal notice; and which notice date, if any, is relevant. A trial on the issue of retroactive support from 1995-2007 and a trial on the issue of retroactive support for 2007 onwards would require evidence be marshalled on many of the same issues, because both questions require a determination of many of the same factual issues and the application of the same legal principles. It may be the case that after making the relevant factual determinations, and applying the legal principles, a trial judge finds that a claim for support before 2007 cannot be sustained, but there would be a great deal of overlap in issues to be determined and the legal principles to be applied for both time periods. Moreover, full, fair, and frank disclosure in support cases is so fundamental to the process that D.B.S. has ear-marked that process in order to consider whether blameworthy conduct exists. Disclosure at an early stage is fundamental because it allows the negotiation process to start.

[51] During oral argument, counsel for the Respondent expressed concern about the cost of an income analysis and, indeed, the Respondent’s affidavit expresses concern about other professional fees that may have to be expended for disclosure going back to 1995. It seems to me that, after making the proper disclosure, it may not be necessary or appropriate to conduct an income analysis. In any event, the Applicant is not currently seeking an order for an income analysis; she is seeking the Respondent’s tax information as well as details on shareholdings and property ownership for the period. This demand is not as onerous as the Respondent is attempting to suggest at this time. I am also mindful of the fact that the Applicant seems to be of far more limited means than the Respondent. The Respondent could, therefore, gain the tactical advantage that might accrue to him as the party of greater means should I order a severance of the issues.

Summary

[52] It is not entirely clear to me why severing the issue of child support for the years 1999-2007 and ordering that a trial first be held on that issue should do away with the obligation on the Respondent to provide disclosure for that period. As outlined above, it seems to me that the D.B.S. analysis, and in particular, its discussion of blameworthy conduct, requires the disclosure of income information for that period. Thus, even if I were to order a bifurcated trial it seems that both the Applicant, and the trial judge, would require information on the Respondent’s income for that period. It is not clear to me why ordering a bifurcated trial should absolve the Respondent of his obligation to provide disclosure.

[53] The law on severance is clear that the litigant’s right to a single trial on all of the issues is not to be easily displaced, and severance is reserved only for the clearest of cases: Simoni, at para. 16; General Refractories Co. of Canada v. Venturedune Ltd., at paras. 10-11. The case at bar does not meet this high threshold. In particular, it seems that there would be a great deal of overlap in the evidence marshalled and the case law applied for the two trials covering the pre- and post-2007 period. It is not clear that there are time and expense benefits to be gained from the bifurcation and determination of the issue of entitlement to child support for the 1995-2007 period. Further, concerns about the cost of disclosure may be addressed by limiting the scope of disclosure, at least initially.

[54] Finally, Rules 2(2)-2(4) of the Family Law Rules state as follows:

Primary Objective

(2) The primary objective of these rules is to enable the court to deal with cases justly.

Dealing with Cases Justly

(3) Dealing with a case justly includes,

(a) ensuring that the procedure is fair to all parties;

(b) saving expense and time;

(c) dealing with the case in ways that are appropriate to its importance and complexity; and

(d) giving appropriate court resources to the case while taking account of the need to give resources to other cases.

Duty to Promote Primary Objective

(4) The court is required to apply these rules to promote the primary objective, and parties and their lawyers are required to help the court to promote the primary objective.

[55] Given the analysis of the D.B.S. factors, and having reviewed the cases submitted on the issue of severance, I find that severing the issue of entitlement would not be fair to the Applicant and would likely not save expense or time. In fact, such an order might increase expense, especially to the Applicant. Moreover, it is more appropriate from a court resource point of view to have a single trial.

[56] The Respondent’s motion for severance is, therefore, dismissed. There will be an order in terms of paragraphs 1(a)-(e) of Applicant’s notice of motion dated December 3, 2012, but only inso far as the motion requests disclosure from the Respondent, not from his wife. Should this initial disclosure require that the court also have available to it documents in the possession of a third party, then, at that time, the appropriate motion may be brought.

[57] The Applicant has enjoyed more success on these motions than has the Respondent. She is presumptively entitled to costs. Should the parties be unable to agree upon the amount of costs they may file written submissions. The submissions should be no more than three pages long and have appended a bill of costs. The Applicant’s submissions are due by no later than April 16, 2013; the Respondent’s by April 30, 2013. If a reply is advised then it should be delivered by May 7, 2013.

Nelson J.

Date: April 2, 2013