SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: FS-10-359870
DATE: 20140611
RE: Alexandra M.Wentges
-and-
Peter Nazir Faiz
BEFORE: Justice S.Stevenson
COUNSEL: Karen Ballantyne, for the Applicant
The Respondent, Appearing in Person
DATE HEARD: June 10, 2014
E N D O R S E M E N T
[1] In her Amended Amended Notice of Motion dated June 2, 2014, the Applicant seeks an order striking out the Respondent’s Answer in its entirety and an order for leave to proceed with an uncontested trial. In the event that the Respondent’s Answer is not struck, she seeks an order requiring the Respondent to pay $50,000 into court as security for costs and to secure child and spousal support, payable from the proceeds of sale of the Respondent’s property at 470 Delaware Avenue, Toronto.
[2] The Applicant contends that the Respondent has been in breach of many orders and the only reason that he is now in compliance with the order of Czutrin J. dated March 13, 2013 pertaining to child and spousal support and subsequent orders pertaining to costs, is due to the fact that the court ordered that his child and spousal support arrears and ongoing support obligation as well as costs owing, be paid out of monies held in trust from the sale of his home. Further, the Applicant submits that the Respondent remains in breach of the disclosure orders made by this court including the recent order of Horkins J. dated April 15, 2014. Some of the disclosure ordered by Horkins J. was to be provided by May 10, 2014 and some was to be provided by May 20, 2014.
[3] The Applicant submits that as there had been non-compliance with court orders since March 2013, her counsel booked a long motion date in September 2013 with the motion to be heard on January 27, 2014. She contends that four days prior to the motion, the Respondent requested an adjournment and more time to provide disclosure. He also sought to terminate spousal support payments. Despite more time being granted to allow the Respondent time to provide the disclosure previously ordered, the Applicant submits that the disclosure was still not provided. She contends that orders have been breached for financial disclosure from March 2013, July 2013, January 2014 and April 2014 and that the Respondent has had sufficient time to comply. She further submits that out of thirteen items to be provided pursuant to the order of Horkins J. dated April 15, 2014, only one item has been provided.
[4] The Applicant further contends that given the Respondent’s previous failure to pay costs orders, child and spousal support, his breach of other orders including a counselling order for the child Joshua, his refusal to use Family Wizard, and the ongoing breach of disclosure orders, the court has sufficient reason to strike the Respondent’s pleadings in their entirety including issues relating to custody and access. She submits that the Respondent has been extremely difficult with respect to custody and access issues. She submits that his chances of success at trial with respect to joint custody are unlikely given that the Respondent cannot communicate in a civil manner with her and his refusal to cooperate with issues such as counselling for Joshua. She submits that his communications with her have been abusive and that he has refused to use Family Wizard to communicate. Further, it is the Applicant’s position that the Respondent’s chances of obtaining more time with Joshua at trial are slim as she contends that he does not use the time he now has to see Joshua. She further submits that there will not be any prejudice to Joshua if the Respondent is not allowed to participate at trial.
[5] If the court is not inclined to strike the Respondent’s pleadings, the Applicant seeks that $25,000 be held out of the Respondent’s proceeds to secure support payments and that $25,000 be held as security for costs. There is currently approximately $80,000 being held in trust. She contends that there has been a history of the Respondent not paying support and of not paying costs orders. As indicated, she contends that the support and costs orders have only been paid to date as they were ordered to be paid out of the Respondent’s proceeds pursuant to court orders. She further submits that if the Respondent receives the proceeds, given his debts to CRA, his sister and his former lawyer, child support and spousal support will never be paid.
[6] The Applicant relies on section 34(1) of the Family Law Act in support of her motion for security for support and Rule 24(13) of the Family Law Rules in support of her request for security for costs. In particular, she contends that as per Rule 24(13)4, “there is good reason to believe that the case is a waste of time or a nuisance and that the party does not have enough assets in Ontario.” She contends that the Respondent has indicated that he has no other assets. She also submits that the Respondent not only has little chance of success on the custody and access issues as set out above, but that his equalization claim and his attempt to set aside an Agreement have little chance of success. Counsel for the Applicant has prepared a Net Family Property Statement that is attached to the Applicant’s Affidavit sworn June 2, 2014. She submits that even with the inclusion of the value of the matrimonial home as part of the Net Family Property Statement, which she contends is the Respondent’s best case scenario, this results in the Applicant not owing an equalization payment to him.
[7] The Applicant therefore submits that the Respondent’s equalization claim is a waste of time or a nuisance as are his claims regarding support (as he has not complied with disclosure orders) and as indicated, his custody and access claims, which she submits all support her claim for an order for security for costs.
[8] The Respondent submits that this is not an extreme or egregious case such that would warrant the striking of his pleadings. He contends that he regularly supported the family from 2009 until July 2012 when he suffered severe financial difficulties with his business. He indicates that he paid for all s. 7 expenses for Joshua. He submits that his income has decreased significantly and that he requires funds to operate his business.
[9] The Respondent disputes that he has been uncooperative with respect to counselling and he submits that the Applicant has also chosen not to use Family Wizard at times. He views these statements by the Applicant and her counsel as attempts to disparage him.
[10] The Respondent indicates that he owes Canada Revenue Agency (“CRA”) over $110,000 and that he owes money to his sister and to his former lawyer. He submits that he has no assets, his corporate account has been frozen by CRA and he needs the release of the funds currently frozen from the sale of his home to pay CRA.
[11] He disputes that the striking of his pleadings and his non-participation in trial will have little impact on Joshua. It is his position that he spends much time with Joshua and has been a great father.
[12] With respect to the Applicant’s position that he has not complied with disclosure orders, the Respondent indicates that he has not provided his 2012 and 2013 Income Tax Returns as ordered as he has not filed them with CRA. He is attempting to seek out other “tax write-offs” before he files. He acknowledges that he has failed to comply with all of the disclosure orders but that he has provided over 80 per cent of the disclosure. He further contends that he has provided enough disclosure to prove his 2012 and 2013 expenses related to his business. He submits that some of the disclosure requested is “gratuitous”. He acknowledges that he is not good at bookkeeping and that he has not kept his financial books up to date. He submits that he has not been able to retain an accountant given his financial difficulties.
[13] The Respondent submits that he is agreeable to the sum of $25,000 being held to secure support payments. He does not contest this relief sought by the Applicant. He further indicates that he is agreeable to another $5,000 being held in trust for section 7 expenses (although this is not sought by the Applicant). He would like the remainder of the funds disbursed to him so that he can pay CRA as these funds he submits represent his life savings.
[14] The Court of Appeal decision of Purcaru v. Purcaru, 2010 ONCA 92, [2010] O.J. No. 427 (Ont. C.A.) dealt with the issue of when pleadings should be struck at paras. 47-50 as follows:
[47] … pleadings should only be struck and trial participation denied in exceptional circumstances and where no other remedy would suffice.
[48] This is particularly so in a family law case where the resulting judgment may provide for continuing obligations that can only be varied on proof of a change in circumstances. A change in circumstances may be difficult to establish if the initial judgment is based on incorrect assumptions, thus perpetuating injustice. Similarly, special care must be taken in family law cases where the interests of children are at issue. The consequences of striking pleadings or limiting trial evidence when custody or access is at issue was discussed in King v. Mongrain 2009 ONCA 486, (2009), 66 R.F.L. (6th) 267 (Ont. C.A.), where Gillese J.A. observed at p. 273 that pleadings should not be struck if such a remedy leaves the court with insufficient information to determine custody. See also Haunert-Faga v. Faga 2005 39324 (ON CA), (2005), 203 O.A.C. 388 (C.A.).
[49] The adversarial system, through cross-examination and argument, functions to safeguard against injustice. For this reason, the adversarial structure of a proceeding should be maintained whenever possible. Accordingly, the objective of a sanction ought not to be the elimination of the adversary, but rather one that will persuade the adversary to comply with the orders of the court. As this court said at p. 23 of Marcoccia v. Marcoccia 2008 ONCA 866, (2009), 60 R.F.L. (6th) 1 (Ont. C.A.), the remedy of striking pleadings is “a serious one and should only be used in unusual cases”. The court also explained at p. 4 that the remedy imposed should not go “beyond that which is necessary to express the court’s disapproval of the conduct in issue.” This is because denying a party the right to participate at trial may lead to factual errors giving rise to an injustice, which will erode confidence in the justice system.
[50] Nonetheless, the decision to strike pleadings and to determine the parameters of trial participation is a discretionary one that is entitled to deference on appeal when exercised on proper principles. The exercise of discretion will be upheld where the motion or trial judge fashions a remedy that is appropriate for the conduct at issue…
[15] Taking into consideration that pleadings should only be struck and trial participation denied in exceptional circumstances and where no other remedy would suffice, I am not prepared to strike the Respondent’s pleadings at this stage especially with respect to the issues of custody and access. There are ongoing issues relating to the child Joshua that need to be fully canvassed at trial with the participation of the Respondent in the trial. To deny the Respondent the right to participate at trial would affect Joshua and the determination of his best interests. The Applicant has provided a number of cases where pleadings have been struck even when there are custody and access issues. Counsel for the Applicant relied in particular in her submissions on the decision of Zisman J. of the Ontario Court of Justice in Mason v. Blanchford [2013] O.J. No. 3363 in support of her argument. However, each of these cases is fact driven and while it appears that communication has been ineffective between the parties, I cannot determine at this stage without the full evidence before the court and the benefit of cross-examination, that the Respondent’s claims for custody and access have no chance of success. These issues need to be fully canvassed before the trial Judge in order to properly determine what is in Joshua’s best interests.
[16] While there is also no question that the Respondent has not complied with disclosure orders and with orders pertaining to support and costs in the past, he is now in compliance with the orders pertaining to support and costs. He has also consented to an order that monies be held back to secure support payments for the next several months. I acknowledge that his compliance with support and costs orders is as a result of further orders of this court that these monies be paid out of the proceeds from the Respondent’s sale of his home, however, the payments are up to date. I am prepared to allow the Respondent an additional 45 days to comply with the disclosure order of Horkins J. dated April 15, 2014. If the Respondent fails to provide the disclosure ordered, the Applicant may bring her motion back on to strike the Respondent’s pleadings with respect to the financial issues. There is no reason for the Respondent not to produce the disclosure as ordered within the next 45 days.
[17] With respect to security for costs, Rule 24 (13) of the Family Law Rules sets out the following:
ORDER FOR SECURITY FOR COSTS
(13) A judge may, on motion, make an order for security for costs that is just, based on one or more of the following factors:
A party ordinarily resides outside Ontario.
A party has an order against the other party for costs that remains unpaid, in the same case or another case.
A party is a corporation and there is good reason to believe it does not have enough assets in Ontario to pay costs.
There is good reason to believe that the case is a waste of time or a nuisance and that the party does not have enough assets in Ontario to pay costs.
A statute entitles the party to security for costs.
[18] The Applicant relies on Rule 24 (13) 4 in support of her motion as indicated above as she contends that the Respondent’s case is a waste of time or a nuisance and that the Respondent does not have enough assets in Ontario to pay costs. I agree with the position taken by the Applicant that the Respondent does not have enough assets in Ontario to pay costs. However, I cannot conclude based on the evidence before me that the Respondent’s case is a waste of time or a nuisance. There is insufficient evidence before the court to embark upon the merits of the Respondent’s case. As indicated, it appears that there are ongoing issues related to Joshua
especially pertaining to the issue of time sharing. There are also ongoing issues pertaining to equalization, including the value of the Applicant’s trust fund, the validity of an Agreement between the parties and whether it should be set aside, which appears to pertain to the matrimonial home, as well as issues pertaining to income determination and appropriate child and spousal support. These issues need to be delved into further at trial.
[19] Further, the Respondent does not reside outside Ontario, and does not have a costs order against him that remains unpaid. Given all of these factors, I am not prepared to order security for costs as requested as the Applicant.
[20] I am, however, concerned that in the past the Respondent has not complied with costs orders and with orders for support. He is not presently in compliance with Horkins J.’s disclosure order. I am concerned that if monies are released to the Respondent out of his proceeds currently being held in trust, these funds will be dissipated. There is no trial date set and there remains an ongoing child and spousal support obligation. The sum of $25,000 agreed to be held in trust by the Respondent will only cover approximately eight months of his support obligation. The court needs to ensure that there are sufficient funds to cover support until trial when the issue will be resolved. No trial date is set given the Respondent’s non-disclosure and there is presently no way to determine the Respondent’s proper income given his non-disclosure. Additionally, added to this is the Respondent’s non-payment of support and costs orders in the past, all of which I find necessitate that the remaining funds be held in trust until further order of the court.
[21] I order the following:
i) The Respondent shall fully comply with the order of Horkins J. dated April 15, 2014 with respect to disclosure within 45 days. If the Respondent fails to produce the disclosure as ordered within 45 days, the Applicant may bring her motion back on to strike the Respondent’s pleadings with respect to financial issues;
ii) $25,000 from the proceeds of sale of the Respondent’s property at 470 Delaware Avenue, Toronto, Ontario shall be held as security for support and shall be paid monthly to the Applicant pursuant to the current order for support;
iii) The Applicant’s motion for security for costs is dismissed; however, subject to paragraph 21ii) the remaining proceeds from the sale of the Respondent’s property at 470 Delaware Avenue, Toronto, Ontario, shall continue to be held in trust and shall not be released pending further order of this court;
iv) The parties shall attend at a Settlement Conference on August 11, 2014 at 11:00 am. If this date is not convenient for the parties, an alternate date shall be chosen and the Settlement Conference shall not be held any later than August 15, 2014;
v) The Applicant shall serve and file written costs submissions, no longer than two double-spaced pages, within 10 days. The Respondent shall serve and file written costs submissions, no longer than two double-spaced pages, 10 days thereafter. The Applicant shall provide any reply submissions 7 days thereafter.
Stevenson J.
DATE: June 11, 2014