Court File and Parties

Newmarket Court File No.: FC-14-46809-00 Date: 20160805 Ontario Superior Court of Justice

Between: Stacey Dawn Davidson, Applicant And: Michael David Small, Respondent

Counsel: Kerry Lynne Thomason, for the Applicant Sheldon Tenenbaum, for the Respondent

Heard: August 3, 2016

Ruling on Motion

JARVIS J.:

Introduction

[1] On March 30, 2015, Rogers J. made an Order that, among other things, required the respondent to disclose relevant financial information by May 5, 2015.

[2] The respondent did not comply with that Order.

[3] On July 29, 2015, the applicant moved for an order striking the respondent’s pleadings. Despite being given at least two extensions of time by the applicant before then, and being represented by two successive law firms (both since discharged) there was no compliance with the disclosure Order. The respondent was granted an extension of time to August 31, 2015. It was noted that the respondent’s explanation for his non-compliance was not satisfactory and that he was being given “one further opportunity to provide disclosure.”

[4] On January 26, 2016, the respondent produced a “Financial Disclosure Brief” purporting to comply with the disclosure Order made by Rogers J. It did not.

[5] A further motion to strike pleadings was brought by the applicant. On May 20, 2016 O’Connell J. observed,

“It is clear that Mr. Small is in wanton non-compliance with disclosure obligation orders. I will indulge him one last time. He shall have until June 30, 2016 by 3:00 p.m. to serve and file the disclosure that is outstanding. If he does not do so by then, his pleadings will be struck.”

[6] On June 27, 2016, the respondent delivered an affidavit purporting (again) to satisfy the balance of the disclosure ordered. This affidavit also described the respondent’s disclosure efforts. Much, but not all, of the disclosure ordered was provided.

[7] A trial scheduling conference was held on July 8, 2016 and a trial endorsement made that precluded further motions in the case without the permission of the case management judge except for a motion by the applicant to strike the respondent’s pleadings for disclosure non-compliance. On July 27, 2016 the respondent delivered a further affidavit dealing with his disclosure. At issue in the motion before this court is whether the respondent is precluded by the Order of O’Connell J. from delivering this further affidavit and whether, even if that is the case, should the applicant’s motion be granted in circumstances where, so it seems, the respondent has substantially satisfied his disclosure obligations.

Context

[8] This case involves a couple who cohabited for about seven and a half years. One child (now eight) was born of that relationship. In October 2014 the applicant started proceedings claiming custody, child support and the remedy of constructive trust based on the respondent’s unjust enrichment. The principal asset involved was a residence purchased after the parties began cohabiting and which was registered in the respondent’s name. That residence has now been sold and there remains approximately $250,000 held in trust.

[9] The parenting and child support issues have not been resolved.

[10] The applicant has claimed that the parties were involved in a joint family venture.

[11] The record evidences considerable efforts by the applicant to obtain from the respondent financial disclosure. It is clear from the record that the respondent has breached at least two court Orders and delayed a more timely adjudication of the outstanding issues.

[12] Exhibit “G” to the applicant’s affidavit sworn July 28, 2016 outlines the disclosure which she contends remains outstanding. Some of what that chart indicates has been produced occurred before the June 30 deadline and some afterwards. Counsel for the respondent acknowledged that his client did not fully comply with the Order of O’Connell J. and that despite the respondent’s efforts, there remains some outstanding disclosure.

[13] It is important to contextually frame the disclosure relevant to this case. The principal issue is the degree to which each party contributed to the accumulated net wealth of the relationship. That will require each party to satisfactorily evidence their qualifying contributions and the attributable value of those contributions to the wealth generated. There is very little disclosure that remains outstanding. The applicant’s chief complaint is more about the quality of the disclosure provided, the absence of which can only disadvantage the respondent, not the applicant. One complaint, for example, requiring proof of a vehicle’s purchase for which the respondent claimed a capital cost allowance, is not captured by the March 30, 2015 disclosure Order. Another, alleging non-disclosure as to where funds from successive mortgage refinancings of the subject residence were deposited, does not appear to have been fully explained to the applicant’s satisfaction. But copies of the mortgage refinancing statements were provided to the applicant in late January, 2016 and the respondent’s July 26, 2016 affidavit contains an explanation, together with exhibits, dealing with the refinanced funds.

[14] How then to deal with the allegations of the respondent’s non-compliance in circumstances where almost all the disclosure ordered has been provided and where what cannot be produced only disadvantages the respondent?

The Law

[15] In Manchanda v. Theti, 2016 ONSC 3776, Myers J. clearly and cogently described how critical “early, voluntary and complete disclosure of financial information” is to family law proceedings. That decision should be mandatory reading for any participant in a family law case. While it is clear that pleadings should only be struck in “exceptional circumstances” and only where all other alternatives for compelling Order compliance have been considered, systemic reluctance to more readily sanction non-compliance only enables those who choose to delay and obfuscate the fair and timely resolution of family issues.

[16] Even so, elimination of an adversary is not the objective of Order compliance. In Pucaru v. Pucaru, 2010 ONCA 92, the court was tasked with an appeal by a father whose pleadings had been struck during the course of the trial. Parenting and financial issues were involved. The court noted the challenges presented,

[48] … The consequences of striking pleadings or limiting trial evidence when custody or access is at issue was discussed in King v. Mongrain (2009), 2009 ONCA 486, 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), 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 (2009), 2008 ONCA 866, 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.

[17] The issues before the court in this case are not unlike those in Kovachis v. Kovachis, 2013 ONCA 663 in which the Court of Appeal reinstated a father’s pleadings in circumstances where his disclosure, although incomplete, was substantial. The court also observed that before striking pleadings consideration must be given to the importance and materiality of the items of disclosure not provided. The inconsistencies in the respondent’s evidence in this case and any failure to better explain the source and destination of funds impact his credibility and his chances for a favourable trial outcome.

[18] The circumstances of this case are not so egregious nor the non-disclosure so deficient as to warrant the striking of the respondent’s pleadings. While I endorse Myers J.’s plea for a culture shift that redraws the line between limiting drastic measures and applying the law in an effective, affordable and more robust manner, this is not a case where the ultimate sanction should be imposed. The court can express its displeasure with the respondent’s conduct in terms of costs.

[19] Accordingly, the applicant’s motion to dismiss the respondent’s pleadings is dismissed.

Costs

[20] If the parties are unable to resolve the issue of costs, they shall, on or before August 19, 2016 file with the filing office their costs submissions limited to three double-spaced pages, such submissions to be filed as part of the Continuing Record. The parties shall also deliver (if applicable and if so desired) their Bills of Costs, Offers to Settle (if any) and the Authorities upon which they may be relying.

Justice D.A. Jarvis Date: August 5, 2016