COURT FILE NO.: CV-11-3255-SR
DATE: 2013-01-17
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: PHILLIP H. DOHERTY and MARY A. COLLINS, Plaintiffs
- and -
CLARKSON MANORS INC. and MICHAEL MOLDENHAUER,
Defendants
BEFORE: Price J.
COUNSEL: Brian P. Pilley, for the Plaintiffs
Alan S. Price, for the Defendants
HEARD: January 14, 2013
E N D O R S E M E N T
NATURE OF PROCEEDING
[1] The defendant, Mr. Moldenhauer, failed to pay costs in the amount of $2,000.00 ordered by Fitzpatrick J. on April 13, 2012. He later opposed a motion brought by the plaintiffs to strike out his Statement of Defence, arguing that he had substantially complied with Justice Fitzpatrick’s Order but was unable to pay the costs ordered, by reason of impecuniosity.
[2] On September 14, 2012, I ordered Mr. Moldenhauer to produce specified financial documents by October 14, 2012 or, if unable to do so, to deliver a sworn affidavit explaining his failure to do so, together with a signed Direction to persons who might be in possession of the documents. I also granted leave to the plaintiffs to cross-examine Mr. Moldenhauer on his affidavit sworn August 2, 2012, and the documents he was to produce, and ordered him to pay the plaintiffs’ costs in the amount of $5,000.00, including the $2,000.00 which Fitzpatrick J. had ordered him to pay and $500.00 which Donohue J. had previously ordered him to pay, by December 14, 2012.
[3] Mr. Moldenhauer paid the $5,000.00 costs on November 16, 2012, but did not comply with the remaining terms of my order. He failed to produce the documents required and failed to attend an appointment on November 19, 2012, to be cross-examined. He took the position that, because he had paid the costs ordered, he was no longer required to produce the documents or to attend for cross-examination. The plaintiff applied to the court for directions as to whether Mr. Moldenhauer was still required to produce the documents and attend for cross-examination.
BACKGROUND FACTS
[4] The background facts are set out in my reasons dated September 14, 2012. I note there that the plaintiffs had asserted that Mr. Moldenhauer, who is a property developer, is not as impecunious as he claims to be. In particular, they had asserted that Mr. Moldenhauer and his wife, who is unemployed, reside together at a property estimated to be worth $1.5 million, which Mr. Moldenhauer had bought in 2000 and transferred to his wife by a series of transactions apparently designed to conceal his interest in the property.
[5] The plaintiffs tendered a Statement of Net Worth which Mr. Moldenhauer had produced in November 2007 in which he had claimed equity of more than $32 million and projected profits of $97 million in a 32 unit townhouse project which he had developed. They also tendered a photograph of the home Mr. Moldenhauer shares with his wife, showing two automobiles, a 2011 Cadillac Escalade and a 2011 Chevrolet Cruz parked in the driveway, both registered to Mr. Moldenhauer’s 80 year old mother, who resides at a townhome that Mr. Moldenhauer built five years ago.
[6] In my order dated September 14, 2012, I gave Mr. Moldenhauer a final chance to pay the costs ordered within ninety days. I also imposed terms allowing the plaintiffs to cross-examine him to test Mr. Moldenhauer’s claim that he is impecunious.
ANALYSIS AND LAW
[7] It is a well-established principle that if a matter is raised in, or put in issue by, an affidavit, the opposite party is entitled to cross-examine on the matter, even if the matter is irrelevant and immaterial to the motion before the court.[^1] Mr. Moldenhauer argues, in effect, that the order requiring him to produce financial documents and attend for cross-examination was intended only to enable the plaintiffs to test his explanation for not paying the outstanding costs orders. In fact, the order had a broader purpose. The motion was brought in the context of an action in which Mr. Modenhauer’s assets and liabilities are in issue. The motion before Fitzpatrick J. sought a remedy for Mr. Moldenhauer’s failure or refusal to disclose documents that were relevant to that issue.
[8] Mr. Moldenhauer’s claim of impecuniosity was common to the motion that was before Fitzpatrick J. and the motion to enforce Justice Fitzpatrick’s costs order, and to the proceeding as a whole. The order to disclose financial documents and requiring Mr. Moldenhauer to attend for cross-examination was intended to achieve the overarching objective set out in Rule 1.04 (1), namely, to secure the just, most expeditious and least expensive determination of the proceeding on its merits. This objective applies to the proceeding as a whole, as well as to the motion to require production, and the motion to enforce Justice Fitzpatrick’s order.
[9] Insofar as my order dated September 14, 2012, was intended, in part, to enforce Fitzpatrick J.’s costs order, as well as the earlier costs order of Donohue J., it was intended to achieve the purposes of costs orders set out in Rule 57.01 (1). The Court of Appeal for Ontario set out those purposes in Serra v. Serra,[^2] (2009), where it stated:
Modern costs rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan 1999 2052 (ONCA), (1999), 46 O.R. (3d) 330, at para. 22.
[10] My order dated September 14, 2012, was intended, in part, to ensure that the plaintiffs was partially indemnified for the costs they had incurred, to encourage disclosure that may facilitate settlement, and to discourage and sanction Mr. Moldenhauer’s inappropriate withholding of relevant information and documents.
[11] Even if the relevance of Mr. Moldenhauer’s cross-examination was limited to his claim of impecuniosity, and that claim was relevant only to his failure to pay the costs ordered by Fitzpatrick J., he cannot avoid his cross-examination by selectively complying with only this term of my order while failing to comply with its other terms, including the one requiring production of documents. It is well established that it is not permissible to withdraw an affidavit, or a statement made in an affidavit, simply to avoid cross-examination on it save, possibly, in cases of mistake.[^3] By analogy, it is not permissible to comply selectively with one term of an order simply to avoid cross-examination on an assertion made in an affidavit whose relevance is confined to that term.
[12] Mr. Moldenhauer has not claimed that his assertion of impecuniosity was a mistake. The plaintiff continues to be entitled to require Mr. Moldenhauer to produce the documents he was ordered to produce, and to attend for cross-examination on his affidavit, even though he has complied with the costs portion of my Order.
CONCLUSION AND ORDER
[13] Based on the foregoing, it is ordered that:
Mr. Moldenhauer shall forthwith produce to the plaintiffs the documents described in paragraph 1 of my Order dated September 14, 2012.
The plaintiffs have leave to cross-examine Mr. Moldenhauer on his affidavit sworn August 2, 2012, and on the documents he produces pursuant to paragraph 1.
Failing compliance with this order, the plaintiffs have leave to return their motion to strike out Mr. Moldenhauer’s Statement of Defence.
Price J.
DATE: January 17, 2013
COURT FILE NO.: CV-11-3255-SR
DATE: 2013-01-17
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: PHILLIP H. DOHERTY and MARY A. COLLINS
- and -
CLARKSON MANORS INC. and MICHAEL MOLDENHAUER
BEFORE: Price J.
COUNSEL: Brian P. Pilley, for the Plaintiffs
Alan S. Price, for the Defendants
ENDORSEMENT
Price J.
DATE: January 17, 2013
[^1]: Wojcik v. Wojcick and Donger, 1971 538 (ON SC), [1971] 2 O.R. 687 (H.C.J.), at p. 688; Ferring Inc. V. Richmond Pharmaceuticals Inc. (1996), 90 O.A.C. 88 (Div. Ct.); [^2]: Serra v. Serra, 2009 395 (ONCA) [^3]: Re Canadian Workers Union and Frankel Structural Steel Ltd. (1976), 1976 829 (ON SC), 12 O.R. (2d) 560 (Div. Ct.), p. 575; R.O.M. Construction Ltd. V. Heeley (1982), 1982 1140 (AB KB), 29 C.P.C. 194 (Alta. Q.B.), pp. 198 to 200.