Citation: Benarroch v. Abitbol et al, 2017 ONSC 4967

NEWMARKET COURT FILE NO.: FC-15-49325-00

DATE: 20170821

ONTARIO

SUPERIOR COURT OF JUSTICE – FAMILY COURT

RE: Alberto Benarroch, Applicant

And

Monique Abitbol, Carlos and Sara Abitbol, Jacob Benarroch, Louis R. Montello, HPI Administrative Services LLC, Hercules Products Inc., Turnberry TS2 Corp., Miami Alone Products Corp., Plasticos Hercules CA, Productos Hercules, CA, Las Princesas Corp., and Rafael Benarroch, Respondents

BEFORE: The Honourable Mr. Justice D. A. Jarvis

COUNSEL: Ms. D. MacKenzie, for the Applicant

And

Mr. J. Moldaver, for the Respondent Monique Abitbol

The Respondents Jacob Benarroch, Louis Montello, HPI Administrative Services LLC, Hercules Products Inc., Turnberry TS2 Corp., Miami Alone Products Corp., Plasticos Hercules CA, Las Princesas Corp., and Rafael Benarroch are not participating in this Motion.

HEARD: April 26, 2017

RULING ON MOTIONS

[1] This Ruling deals with motions by both parties.

[2] The respondent wife (“the wife”) requests an Order:

(a) striking the pleadings of the applicant husband (“the husband”) for non-compliance with the payment term of an Order made on October 26, 2016;

(b) child and spousal support in the amount of $60,000 a month commencing July 1, 2016, uncharacterized (i.e., not distinguishing at this time between child and taxable spousal support) on a without prejudice basis;

(c) interim disbursements of $295,000; and,

(d) disclosure.

[3] The husband brings a motion for various heads of relief but restricted his requests when the motions were argued to varying the Order made October 26, 2016 directing that he pay $50,000 to the wife as a term of adjournment of her motion and for questioning her.

Background

[4] In a Ruling released on July 31, 2017[^1], Kaufman J. dismissed a motion by several non-spousal respondent third parties. That motion was argued on March 29, 2017 and sought to set aside two interlocutory Orders of this court granting Mareva injunctions against them. This court adopts Kaufman J.’s summaries of the procedural background of this case and the parties’ litigation positions[^2]. Additional evidence relevant to the motions now before the court was filed after the March 29, 2017 arguments before Kaufman J.

[5] The wife started a motion for temporary relief on August 17, 2016 returnable on October 26, 2016. The principal relief requested was child and spousal support, and for interim disbursements. Her motion was subsequently amended to deal with issues and events arising between the date it was started and when her motion was finally argued.

[6] When the wife’s motion first came before this court on October 26, 2016, the evidence was that the husband had maintained the family’s expenses for about eight months after the parties separated in March 2013[^3] but nothing afterwards for the support of his family except for the sum of $50,000 in September 2014.

[7] On October 26, 2016, the husband sought an adjournment for a number of reasons. He had not delivered any material in response to the wife's motion and claimed that his counsel of choice from the law firm which he had retained was unavailable. No Case Conference had been held either. The Endorsement made that day included the following comments:

“There has been considerable delay in this matter and the evidence before the court appears to indicate a situation where the [wife’s] ability to proceed is being frustrated… There has been apparently no response [by the husband] to the [wife’s] forensic expert’s May 26, 2016 letter…This matter must proceed and disclosure must no longer be delayed.”

[8] Next step directions were given. The husband was ordered to pay to the wife as a without prejudice term of the adjournment the sum of $50,000 by November 7, 2016.

[9] The husband did not comply with the payment term of the Order.

[10] On January 9, 2017 Nelson J. held a Case Conference. As the husband had paid nothing pursuant to the Order made on October 26, 2016, Nelson J. declined to hear from him. The wife's temporary relief motion was rescheduled to April 26, 2017.

[11] The husband paid to the wife $5,914.63 shortly after the Case Conference. Another cheque in the amount of $1,058 was paid by the husband about a week before the motions now before the court were argued.

Wife’s Position

[12] According to the wife the husband legally or beneficially owns properties worth anywhere from tens to hundreds of millions of dollars and has undertaken a multi-pronged strategy to ensure that she and the children receive “nothing”. The strategy is principally evidenced by:

(a) the failure and/or refusal by the husband to maintain the lifestyle which the family enjoyed before the party’s separated;

(b) the husband’s arrangement of his financial affairs to ensure that they are as opaque as possible, often involving third party nominee owners;

(c) non-responsive or uninformative financial disclosure which obscures rather than clarifies a better understanding of the husband's business activities. The wife alleges that what disclosure is being provided does not meaningfully respond to her expert’s requests nor to the Order made on October 26, 2016; and

(d) the husband's allegations that throughout the parties’ married cohabitation they incurred debt in excess of $25 million to fund the family's lifestyle.

[13] In the extensive affidavits which the wife swore, she detailed and corroborated where possible the nature and extent of the husband's business dealings, mostly in Florida and Venezuela. These involved companies in which a Florida lawyer (Montello) was identified as “agent” and included the husband's father and friend (Avan) through a web of companies incorporated in Panama and Florida. Two of the residential properties (“Golden Beach”) and (“Turnberry”) are properties in respect to which the parties had met with an architect shortly before they separated to plan its demolition and the construction of an 11,000 square foot “family” home (“Golden Beach”) or where the husband told the wife that he planned to renovate the property (Turnberry, TS2 unit). The children were asked to select the furnishings for their bedrooms/bathrooms with respect to the latter property. In the concurrent legal proceedings in Florida the wife obtained an Order enjoining the sale of the Golden Beach property after she learned in the fall of 2015 that it was listed for sale for $8,900,000 USD.

[14] Additionally, the wife appended to her affidavits documents evidencing conversion by the Venezuelan government to USD amounts in excess of $51 million USD between 2004 and 2012 involving a company, Productos Hercules (Venezuela), wholly owned by the husband and in excess of $91 million USD involving Plasticos Hercules (Venezuela) over the same period of time. The husband acknowledged a 4.69 percent ownership interest in this latter company but the wife has alleged that he is the company's beneficial owner. She was involved with translating for one of the trades after the husband purchased land and warehouses for the company.

[15] The wife alleges that prior to the party’s separation they lived what can only be described as a lavish lifestyle costing anywhere from $500,000 USD to $700,000 USD a year. The husband spent almost $3 million on jewellery for the wife. The wife claims that she incurred about $25,000 a month in credit card charges which the husband paid. These charges were incurred primarily for clothing for the children and herself, aesthetics and entertainment.

[16] When she started her motion in August 2016 the wife sought interim disbursements of $295,000 without prejudice to a right to seek further disbursements if needed. This claim comprised a fee estimate ranging from $120,000-$195,000 from her forensic expert and $100,000 for her legal expenses for her Ontario counsel. In her affidavit sworn January 30, 2017, the wife swore that she had already spent $270,000 USD on her Florida attorneys.

[17] The wife claims that the husband has failed and/or refused to produce meaningful disclosure as framed by her pleadings and requested by her forensic expert.

Husband’s Position

[18] The husband claims that the wife is untruthful in that most of family assets having any value are owned by her and her parents such that she will owe him a substantial equalization payment. In addition to the three properties she owns (two in her name alone and the third being the matrimonial home of which he is a co-owner) the husband alleges that when the parties separated there was over $1,550,000 in gold coins in safety deposit boxes and $150,000 in silver bars too heavy for safety deposit kept at the matrimonial home.

[19] While acknowledging that the parties enjoyed an affluent lifestyle the husband asserts that his overall financial circumstances are modest. As observed by Kaufman J. in his Ruling (paragraph 17) the husband asserts that virtually all of the family's wealth is attributable to the generosity of his father and his father's friend (Mr. Avan) who collectively advanced in excess of $25 million to enable the family (and the wife's parents) to enjoy their lifestyle while simultaneously ensuring that the father and Mr. Avan were able to remove some of their wealth from Venezuela. Throughout the husband's affidavit are repeated references to the wife and her parents being “well aware” that the $25 million was “borrowed”, which allegations the wife denies.

[20] The husband asserts that he lives modestly in Venezuela and that his 2014-2016 annual income is slightly more than $36,000. After the party’s separated in March, 2013 he maintained a financial status quo for about eight months but paid nothing afterwards until September, 2014 when $50,000 was provided. He has not been able to fully comply with the payment term of the October 26, 2016 because (as the husband alleges) his father refuses to loan him any more money “because [the wife] has already stolen so much from him and from his good friend, David Avan”. It is noteworthy that in a separate action started after these proceedings were issued Mr. Avan has sued the husband, the wife and her family for $6,334,340 USD for loans allegedly made to the parties and the wife’s parents.[^4]

[21] With respect to the wife’s claim for interim disbursements the husband maintains that this issue (along with the issue of support) should be adjourned pending the completion of Questioning and that, in any event, the wife’s circumstances don’t warrant such an Order being made.

[22] Finally, the husband claims that he has answered all of the wife’s disclosure requests to the best of his ability.

Analysis

[23] Each of the parties’ issues shall be addressed separately.

October 26, 2016 Court Order

[24] The wife seeks an Order striking the husband’s pleadings and granting her leave to proceed to Trial on an uncontested basis, subject to any future disclosure to be obtained from the added non-spousal respondent parties, none of whom is an Ontario resident or apparently owns property in Ontario. This request must be viewed in the context of the wife’s request elsewhere in her motion to compel the husband to comply with the balance of the disclosure needed by her expert. Begging the question is how striking the husband’s pleadings for Order non-compliance will spur him to comply with any further disclosure Order.

[25] No appeal by the husband was taken from the $50,000 payment term of the Order. It is unlikely that any appeal would have been successful in the circumstances or that it could have been heard before the January 9, 2017 Case Conference anyway. It is noteworthy that it was only shortly after that Nelson J. declined to hear from the husband that anything was paid on account of the Order ($5,914.63) and, further, nothing more was paid until shortly before these motions were argued ($1,058). Excluding interest, the sum of $43,027.37 remains unpaid. The husband’s explanation that he is incapable of complying with the term of the Order or that he has made efforts to comply with it are little more than bald statements.

[26] In Van v. Palombi[^5], the Divisional Court upheld a lower court Order striking a husband’s pleadings in a “high conflict matrimonial matter involving multiple proceedings” [para. 4] but permitted him to participate in a limited capacity in the trial dealing with custody and access issues. Among other explanations, the husband in that case had claimed impecuniosity in paying nothing towards several costs Orders. There was no dispute about the principle to be applied in striking pleadings,

[30] The legal principle governing the exercise of judicial discretion to strike a party’s pleadings is a three-pronged test as follows:

(1) Is there a triggering event justifying the striking of pleadings?;

(2) Is it appropriate to strike the pleadings in the circumstances of the case?;

(3) Are there other remedies in lieu of striking pleadings that might suffice?

[31] These three-pronged principles are well established in the case law. (See Kovachis v. Kovachis, 2013 ONCA 663, 367 DLR (4th)189; Chiaramonte v. Chiaramonte, 2013 ONCA 641, 370 D. L. R. (4th) 328; Purcaru v. Purcaru, 2010 ONCA 92, 265 O.A.C. 121 at paras. 47-48; King v. Mongrain (2009), 2009 ONCA 486, 66 R. F. L. (6th) 267 (Ont. C.A.); Haunert-Faga v. Faga (2005), 2005 CanLII 39324 (ON CA), 203 O.A.C. 388 (C.A.); and Marcoccia v. Marcoccia (2009), 2008 ONCA 866, 60 R. F. L. (6th) 1 (Ont. C.A.).

[32] This Court is satisfied that the motion judge correctly stated the legal test to be applied to the motion to strike pleadings of a party pursuant to rule 1(8) of the Family Law Rules. In the questions she articulated in her reasons, it is evident that she identified the test as a three-step legal test for striking pleadings.

[27] It is undisputed in this case that the husband has not fully complied with the payment term of the Order. His reasons for non-compliance are unpersuasive and his evidence about his financial circumstances is transparently self-serving. There must be consequences to Order non-compliance: what this court permits, it promotes.

[28] In granting the husband in Van limited trial participation, the Court proceeded to comment on parts (2) and (3) of the test,

[35] The jurisprudence indicates that even in the event of a court finding a “triggering event”, justifying the striking of pleadings, it is still within the discretion of the court to decide to strike or not on all of the circumstances of the case. Furthermore, the striking of pleadings and the denial of trial participation which follows as a result, should only be done in exceptional circumstances and where no other remedy would suffice. The third step of the test is the examination of other remedies that might be appropriate in lieu of striking pleadings, a step that the motion judge fails to mention.

[36] The rationale for such a cautious and restrained test was explained in the case of Kovachis v. Kovachis, supra, at paragraph 25. The consequence of an order striking the pleadings of a party effectively prohibits that person from participating in any way at the trial of the matter. Without that participation there is a risk that the court will not have all necessary and accurate information to reach a just result. If the judgment provides for continuing obligations or relationships that can only be varied on changed circumstances, as often happens in family law judgments, then injustice may be perpetuated.

[29] In an alternative to her request to strike the husband’s pleadings the wife has asked that the husband be prohibited from taking any further steps in these proceedings until he complies with all Orders of the court and that his affidavits responding to her motion be struck from the Record. This alternative request addresses the proportional exercise of the court’s discretion when considering part (2) of the test as observed in Purcaru v. Purcaru[^6],

[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.

[30] This court does not accept the husband’s explanations for his non-compliance with the payment term of the Order but it would not be appropriate at this juncture to strike his pleadings without affording him a last opportunity to fully comply. This is because the cases upon which the wife relies, and which the courts in this Ruling have referenced, have all involved a greater history of non-compliance than obtains in this case. The husband is forewarned. He will be given a last opportunity to comply with the payment term of the Order during which he will be prohibited from taking any further step in these proceedings. Failure to comply with the Order by the deadline will entitle the wife to move without notice to the husband to strike his pleadings involving all financial issues between the parties.

Support

[31] The general principles guiding the exercise of the court's discretion when dealing with support pending trial were summarized by Penny J. in Knowles v. Lindstrom[^7]

[8] It is well-established that interim support motions are not intended to involve a detailed examination of the merits of the case. Nor is the court required to determine the extent to which either party suffered economic advantage or disadvantage as a result of the relationship or its breakdown. These tasks are for the trial judge. Orders for interim support are based on a triable or prima facie case. An order for interim support is in the nature of a “holding order” for the purpose of maintaining the accustomed lifestyle pending trial, Jarzebinski v. Jarzebinski, 2004 CarswellOnt 4600 (ONSC) at para. 36; Damaschin-Zamfirescu v. Damaschin-Zamfirescu, 2012 ONSC 6689, 2012 CarswellOnt 14841 (ONSC) at para. 24.

[32] While Knowles dealt with interim spousal support, Penny J.'s observations apply equally, if not more forcefully, to child support as reflected by the objectives of the Federal Child Support Guidelines. In these proceedings the evidence is clear that as a result of the marriage breakdown there has been a dramatic change in the family’s accustomed lifestyle. Given the consequential nature of an interim order, especially where (as here) the issues are complex, vigorously disputed and involve extra-territorial assets all of which factors point to protracted litigation, it is incumbent on each party to put their best foot forward. Among other things this involves timely and meaningful financial disclosure and plausible evidence upon which a court can rely.

[33] The husband's evidence about his financial circumstances and those involving his immediate and extended family are troubling. Reasons include:

(a) in the four years since the parties separated, and at least eight months since the wife started her motion, there is no affidavit from the husband's father which confirms any of the husband's allegations about the source of the family's wealth and, in particular, the debt allegedly owed to him. Nor is there any evidence why such an affidavit from the father could not have been produced. Yet the father swore four affidavits on June 9, 2016 in Florida, filed in these proceedings, dealing with the wife’s allegations about the husband’s assets in that State!;

(b) despite the fact that Mr. Avan has separately started an action against the wife and her family in the Ontario Superior Court of Justice there is no evidence from him confirming any of the husband's allegations as those relate to the family lifestyle “loans”;

(c) the husband's allegations that the wife and her parents were always aware that the family's lifestyle was funded by “loans” are unsupported by any documentation attributed to, or acknowledged by, the wife or her parents;

(d) the husband explained that his father and Mr. Avan were engaged over a number of years in moving from Venezuela to the United States and Canada millions of dollars. According to the husband these gentlemen are “astute businessmen”. What is so puzzling though is the absence in these proceedings of any documentation or evidence of beneficial ownership involving any of the properties owned, or formerly owned, by the wife and her family to which the husband and/or Mr. Avan have advanced trust claims. There is no evidence as to why none of the transactions involving the source and beneficial ownership or alleged loan-nature of the funds advanced was not memorialized in some way at or shortly after the date of their transactions or events or, if in some way documented, those documents could not have been produced in the eight months since the wife started her motion;

(e) the husband swore that he is prepared to pay child support according to his ability to pay but, even after acknowledging a limited liability, he has paid nothing to the wife for child support save and except for the funds advanced in September 2014;

(f) nowhere in the husband's evidence is there any explanation about the expectation or arrangements between his father and him (or with Mr. Avan for that matter) how someone like the husband earning only $36,000 a year could ever afford to repay in excess of $25 million;

(g) apart from alleging that his wife is untruthful, the husband has avoided directly responding to many of the allegations in her affidavits even though he has had months to consider them. For example, the wife detailed in her August 10, 2016 affidavit discussions between the parties and their later meeting with Mr. Montello about ownership of the Golden Beach property, and architectural plans for its reconstruction (paragraphs 87 to 91). The husband did not directly respond to these allegations. In his affidavit sworn December 2, 2015 he stated “…I have never owned, nor does anyone own on my behalf, the Golden Beach property. I have never introduced myself as the “owner” of the home.’ (para. 30). Nothing was said about the wife’s allegations about the parties’ discussions, a meeting with the attorney or plans for the property’s development. The husband’s evidence is evasive. There are more examples.

[32] The wife alleged that when she refused to reconcile with the husband he told her that she and the children would receive “nothing”. The procedural history of this case, the husband's bald, unsupported allegations as set out above, his failure to pay support (except as already noted) and an unconvincing explanation for his failure to fully comply with the payment term of the Order made on October 26, 2016 all support that allegation.

[33] Although the motions before the court are interim only, the wife's evidence is more plausible than the husband's evidence. In reaching this conclusion, no regard has been given to several of the wife’s allegations contained in her affidavits where she did not disclose the source of information (see for example, paragraphs 32, 69-71, 79 and 86 (first sentence) of her affidavit sworn August 10, 2016).

(a) Income Imputation

[34] In Teitler v. Dale[^8], an interim support case, Harvison Young J. considered whether parental financial assistance, which the husband in that case argued were loans rather than gifts, could be included in a payor's income. Following the Ontario Court of Appeal decisions in Bak v. Dobell[^9] and Korman v. Korman[^10], the Court observed that section 19(1) of the Federal Child Support Guidelines did not exhaust the circumstances in which a court could impute income where appropriate. The husband’s submission in Teitler that a determination whether the monies advanced were gifts or loans should be deferred to trial was rejected.

[35] In this case, the wife contends that the lifestyle which the family enjoyed was funded by the husband's income, and did not comprise loans except very early in the party’s marriage, which loans were repaid. The husband acknowledges that the family’s lifestyle was affluent. Without having to determine whether the funds provided were loans or gifts at this time, the relevant factors for the court to consider are no different from those identified in Bak,

“In considering whether it is appropriate to include the receipt of unusual gifts in income, a court will consider a number of factors. Those factors will include the regularity of the gifts; the duration of their receipt; whether the gifts were part of the family's income during cohabitation that entrenched a particular lifestyle; the circumstances of the gifts that earmark them as exceptional; whether the gifts do more than provide a basic standard of living; the income generated by the gifts in proportion to the payor's entire income; whether they are paid to support an adult child through a crisis or period of disability; whether the gifts are likely to continue; and the true purpose and nature of the gifts.”[^11]

[36] In Teitler, Harvison Young J. noted that, as in Korman, “the flow of funds to the family was regular and continued throughout [the parties’] relationship” [para. 50]. The amounts were “very substantial” and enabled the family to enjoy a privileged lifestyle involving private school for their children, a downtown Toronto residence in an exclusive neighbourhood, expensive cars and extensive travel. In this case, the husband has sworn that the parties’ lifestyle before separation “was funded in large part by the loans from my father and Mr. Avan.”[^12]

[37] In Teitler, the husband's evidence was that any parental financial support was no longer available after the parties separated. That is what the husband in this case maintains.

[38] In finding that the monies received by Mr. Dale from his parents in Teitler could be considered in determining his income, Harvison Young J. reasoned that the quality of Mr. Dale’s disclosure, particularly as that included loans allegedly made by his parents was “less than impressive” and that, more generally, his evidence was not credible. The learned judge accepted Ms. Teitler’s evidence about the parties’ lifestyle and her lack of knowledge about the loans more persuasive. These observations apply with equal force to this case. For those reasons and the reasons set out in paragraph [31] above, the funds provided by the husband’s father shall be considered in determining what support should be paid.

(b) Assessing Income

[39] As with the duty to fairly disclose, and credibly value, assets[^13] so too is there a duty on a spouse to meaningfully disclose all of the sources of their income and to estimate their expenses. Where support is an issue, both spouses must put before the court a credible record upon which a court can rely to determine support obligations in accordance with the statutory objectives. This, as a minimum, includes needs and ability to pay and should reflect, or be calibrated by, the parties’ lifestyle depending on the circumstances. Recognition of this duty is especially important for, and its discharge incumbent on, a spouse who has primarily and/or historically assumed the support obligation. A spouse who neglects this responsibility does so at their peril.

[40] Absent questioning, and more reliable evidence with which to ascertain the husband's income, it is not unreasonable to consider the financial statements sworn by the parties.

[41] The wife’s two financial statements were sworn on August 10, 2016 and January 3, 2017. Their information was updated by an affidavit from her solicitor’s law clerk sworn on March 27, 2017 which mostly focussed on the decrease in the wife’s savings (i.e. $533,120.90 to $175.000) and an increase in debt to her father (i.e. $1,500,000 to $2,140,000) but otherwise confirmed the accuracy of the figures contained in the statements. In her affidavit sworn April 10, 2017 the wife reaffirmed the reliability of her financial disclosure.

[42] The wife is claiming $60,000 monthly in a combined child and spousal support Order. She did not work outside of the home after the parties started their family; the husband was always the primary breadwinner. The wife earns little, mostly passive, income from investments and government child benefits, totalling about $12,751.44 annually. She claims that her estimated expenses are $694,353.34 a year, or about $57,860 a month. Some of these monthly expenses, such as gifts ($2,000), parties ($3,000), groceries and meals outside the home ($5,000) appear excessive. Her financial statements are detailed and her several affidavits exhibit personal banking and credit records demonstrating a history of considerable cash flow available to the family.

[43] Nowhere in the husband's evidence does he dispute the expenses claimed by the wife.

[44] The husband filed two financial statements sworn, respectively, on October 1, 2015 and April 25, 2017. In addition, an affidavit explaining substantial changes to the husband’s October statement was sworn by his solicitor’s law clerk on January 3, 2017 and filed for case conference purposes pursuant Family Law Rules[^14] 13(12) and 13(12.2) 1. The changes were noted as being based on information from the husband. Each of the financial statements disclosed the husband’s annual income and expenses: $39,423.46 income against $41,880 for expenses in 2015; $25,860 income and $14,748 for expenses in 2016. Neither statement disclosed anything being paid on account of support. No values were assigned in any of the three documents to the values of the husband’s interests in Productos Hercules and Plasticos Hercules. A “TBD” (a commonly used acronym for “to be determined”) entry in the prescribed value columns for both financial statements is, quite frankly, unacceptable given the passage of time since the parties separated, even adopting the husband’s valuation date: the clerk’s affidavit is silent, as are all of the affidavits filed by or on behalf of the husband, as to what efforts (if any) the husband had initiated to value his acknowledged business interests or, if initiated, their status.

[45] The foregoing underscores the inadequacy of the husband’s response to the wife’s allegations about his sources of income. He claims that he has lived, and continues to live, modestly since the parties separated and that he no longer has access to what he alleges are funds from his father, family or friends. The wife alleges that the husband earns a substantial income or continues to enjoy access to considerable third party funds. There is merit to the wife’s submissions.

[46] In his financial statement sworn October 1, 2015 the husband claimed that he owed his father $19,805,927.34 CDN on November 29, 2013[^15]. In the “Details” box adjacent to that entry, the husband stated that the current debt was $16,953,566 USD (using a 1.33 exchange rate) which resulted in a figure owing on the statement date of $22,548,242 CDN, an increase of $2,742,315 over a twenty-two month period since the valuation date, or $124,650.68 a month.

[47] The clerk’s affidavit stated that one of the changes to the husband’s financial statement was that he then owed his father $16,953,566 USD as of November 30, 2016, the same figure which the husband swore in his financial statement that was owed on November 29, 2013[^16].

[48] The husband’s financial statement sworn April 25, 2017, stated that the debt allegedly owed to his father on the valuation date remained $19,805,927.34 CDN but that it had increased to $23,561,427 CDN. This represents a difference of $3,755,500 from the valuation date or about $91,598 monthly over the forty-one month period between November 29, 2013 and April 25, 2017. In calculating this higher amount the husband changed the earlier current figure owed of $16,953,566 USD[^17] to $17,308,224.94 USD[^18], an increase of $354,659 USD. There is nothing in the husband’s most recent financial statement or in his affidavits explaining the reason for this increase in debt. This represents about $70,932 USD monthly over the five month period from November 30, 2016 to April 25, 2017, or $94,340 CDN a month (using the husband’s 1.33 exchange rate[^19]).

[49] It is difficult to know what to make of the unexplained inconsistencies in the husband’s evidence. There is no explanation for the increases in debt alleged between the valuation date and the statement dates in his two financial statements, nor any explanation for the increase in USD for the amount owed in that currency between his first financial statement and the clerk’s affidavit on the one hand and his most recent financial statement on the other. For two different dates (i.e. October 1, 2015 and November 30, 2016) the husband has used the same figure (i.e. $16,953,566 USD) as owing to his father. On the day before the motions were argued, the husband swore that a higher amount was owed (i.e. $17,308,224.94).

[50] The husband has had plenty of time to get his story straight and to provide satisfactory evidence in response to the wife’s claims about his income. Given the history of this case, he cannot hide behind any language barrier, ignorance of what this court expects of a litigant or what he may have been told by counsel, availability of counsel or even currency exchange rates.

[51] What is certain is that the husband has sworn that he owes his father ever increasing amounts. Since November 29, 2013, that alleged debt has increased an average of $91,598 a month using the husband’s choice of a November 29, 2013 valuation date, as referenced in his October 1, 2015 financial statement, and April 25, 2017. This income does not appear to be taxable.

[52] Even though there has been no questioning, the quality of the wife’s evidence is far preferable, and her narrative of the parties’ financial affairs more plausible and convincing, than that of the husband. As already noted her financial statement is detailed and its contents appear consistent with the lifestyle which both parties agree was shared before they separated. The husband has failed to put forward a credible record about his financial circumstances since then. Whether this court follows the analysis in Teitler and finds that the husband has not satisfactorily persuaded the court that he doesn’t have access to the income which the parties enjoyed before their separation or whether the court accepts the husband’s sworn statements about his ever increasing debt to his father, it is clear that the husband has sufficient income with which to support his family in a manner reasonably consistent with the family’s earlier lifestyle. He is accountable for his failure to be more forthcoming and pro-active about his income.

[53] Although some of the wife’s monthly expenses seem excessive, a monthly combined child and spousal support award to her of $50,000 is warranted in the circumstances, on a without prejudice basis. Given the husband’s almost complete abdication of his financial obligations to his family since the parties separated there is no reason why, as the wife has requested, the Order should not start on July 1, 2016.

[54] The husband shall pay to the wife as and for child and spousal support the uncharacterized amount of $50,000 a month starting July 1, 2016. To be perfectly clear this figure is not allocated between child and spousal support and does not take into account tax consequences. This award is not unreasonable in light of the fact that there are seven people in the wife’s household and the husband has only himself to support in his household.

Interim Disbursements

[55] The wife seeks interim disbursements of $295,000 to fund her litigation and expert expenses. Having spent about $270,000 USD on her Florida attorney and “tens of thousands” in her Ontario proceedings, she claims that she can no longer afford to continue covering such expenses and incur further debt given the alleged wealth of the husband.

[56] In her financial statement sworn on August 10, 2016 the wife disclosed valuation date assets worth $7,833,120.80 before notional realty and investment account disposition costs, without taking into account the value of her jewelry. As noted above (para. [41]) the wife had about $175,000 in savings and owed her father $2,140,000 shortly before the motions were argued. Nowhere shown in any statement about her financial affairs though was a value for her jewelry nor anywhere in any of her pleadings can be found any acknowledgement of, or response to, the husband’s allegations that she had retained over $1,700,000 in gold coins and silver bars when the parties separated.[^20]

[57] Family Law Rule 24(12) provides as follows,

PAYMENT OF EXPENSES

(12) The court may make an order that a party pay an amount of money to another party to cover part or all of the expenses of carrying on the case, including a lawyer’s fees.

[58] The leading authority in Ontario dealing with interim disbursements is Stuart v. Stuart[^21]a decision of Rogers J. In awarding a wife who had neither the liquid assets nor the disposable income to retain an expert a $25,000 “loan” from her husband to value his assets[^22], which Rogers J. described as complex, the court identified seven “themes” in the Ontario case law concerning interim disbursements. These themes were considered in the context of the primary objective of the Family Law Rules to, among other prescriptives, enable the court to deal with cases justly[^23] and to ensure that the procedure was fair to all parties.[^24] Predominant among the Stuart themes, and often repeated, is the principle that the award should be made to “level the playing field”[^25]

[59] In Romanelli v. Romanelli[^26], a case where the respondent had assets worth in excess of $2 million, and the applicant had none - she was subsisting on Ontario Works assistance - McDermot J. observed that,

[19] It appears that the fundamental basis for ordering interim disbursements is to even the playing field between an impecunious litigant and a much more prosperous opponent…[T]he purpose of the rule…is to allow an impecunious litigant to pursue a meritorious family law claim.

[60] In Chiaramonte v. Chiaramonte[^27], Bielby J. awarded a wife $120,000 to fund a business valuation and income analysis of her husband in circumstances where there had been an earlier advance of funds but she had depleted her assets.

[61] In Turk v. Turk[^28] and Woodburn v. Woodburn[^29] both cases upon which the husband relies, the court in each case awarded interim disbursements where the issues involve complexity of the husband’s business affairs (Turk) or where the manner in which the other party was conducting their case suggested the likelihood of greater litigation costs being incurred (Woodburn). Both cases are instructive about the evidentiary requirements needed for an interim disbursement motion to succeed.

[62] Despite this court's disposition of the wife's interim support request, it cannot be said that the wife in this case is incapable of funding the interim disbursements she has claimed. She owned in excess of $7.8 million in assets on the valuation date. She is not impecunious, although the Certificates of Pending Litigation granted by Master Jolley may impact her ability to access additional capital through debt financing or a sale of property. Her failure and/or reluctance to directly address the husband’s repeated pleadings that she retained over $1,700,000 in gold coins and silver bars when the parties separated is troubling.

[63] The wife’s motion for interim disbursements is dismissed without prejudice to the wife renewing her motion based on such additional evidence as may become available through further disclosure from the husband or after questioning (if questioning proceeds).

Disclosure

[64] Appended to the wife's Answer, which was served on the husband on December 16, 2015, was a 17 page letter dated November 23, 2015 from the wife's expert setting out the initial disclosure needed. This letter was detailed, some of which contained what may be described as routine requests, and the balance particularized to the wife's pleadings and contents of the husband's financial statement.[^30] This letter was expanded to 19 pages on May 26, 2016 and accompanied this motion which, as noted earlier in this Ruling, was started in late August 2016.

[65] In her August 10, 2016 affidavit the wife alleged that since separation in early 2013 the husband had failed and/or refused to produce disclosure. This is undisputed.

[66] By October 26, 2016 over two months after the wife started her motion, the husband had neither filed any responding materials nor produced any of the disclosure requested, most of which had been identified and of which he was aware over 10 months earlier in mid-December 2015. This was the procedural context in which the court acceded to the husband's request to adjourn the wife's motion and made the observations about disclosure and delay referenced in paragraph [7] above.

[67] The husband was ordered to provide a meaningful response to the May 26, 2016 disclosure letter of the wife's expert.

[68] On November 30, 2016 and January 12, 2017 the husband purported to answer the disclosure requested. Based on those responses, the wife's expert updated, and refined, his disclosure request. Attached to the wife’s material, which was updated for the purposes of her motion, were a ten page disclosure letter and a chart (“Supplemental Disclosure Request”) which identified the disclosure requested, referenced the information provided by the husband, commented on the disclosure made and noted what more was needed.

[69] A review of the disclosure requested, and provided, is instructive:

(a) as already noted, the scope of the disclosure requested by the wife included companies or individuals (like the husband's father or Mr. Avan) to which the husband disclaimed ownership or over whom the husband claimed that he had no authority;

(b) for several assets, the husband advised that the wife was an owner, a co-owner or signatory to business and/or bank account documents and was able to obtain this information herself;

(c) several of the disclosure requests involve the debts claimed by the husband, the statutory burden of proof resting squarely on him, and which burden it does not appear that the husband can discharge based on the questionable provenance and paucity of the disclosure made to date;

(d) with a few exceptions (which will be addressed below) the balance of the expert’s comments or about further disclosure needed can be addressed at questioning, where a more robust evidentiary record can be obtained. Or by the wife exercising due diligence with respect to those assets allegedly owned or co-owned by her and for which she is or may have been a signatory to various business and banking documents.

[70] Two unsatisfied disclosure requests are noteworthy, and troubling.

[71] As far back as mid-December 2015 the wife requested organizational, corporate and banking documents for Plasticos Hercules CA (Miranda, Venezuela) and Productos Hercules CA (Miranda, Venezuela) from and after January 1, 2010. For these two companies the wife included as exhibits to her August 10, 2016 affidavit documents purportedly obtained from the Venezuelan government. These documents listed the amount of money converted to US dollars by the government with respect to Plasticos Hercules ($91,570,420) and Productos Hercules ($51,446,108) between 2004 and December 31, 2012. By letter dated November 30, 2016, the husband’s solicitor advised that the husband had advised that “there was a sinister fire at the company's location and, therefore, he is unable to provide most of the corporate documents as they were lost in the fire”. Both of the companies operated from the same location: fire department records were apparently produced although the wife’s expert has suggested there were authored by the husband. The fire happened in February 2016. It is not clear whether this fact was made known to the wife before his solicitor’s November 30, 2016 letter or that the corporate documents requested by the wife were, for this or any other reason, not earlier produced.

[72] In a letter dated January 27, 2017[^31], which accompanied the wife’s motion and which was sent to the husband’s lawyers, the wife's expert acknowledged the husband’s advice and suggested how the husband could more pro-actively deal with this aspect of the outstanding disclosure request,

Deborah MacKenzie’s letter of November 30, 2016 included her client’s response in relation to requests for documents for Venezuelan corporations that a “sinister fire” at the company’s location has rendered Mr. Benarroch unable to provide most of the corporate documents for the two businesses in Venezuela, as they were lost in the fire. As noted in the attached Table, we request confirmation of the fire and related damage from a party other than Mr. Benarroch, as all evidence of the fire was provided in documents he signed. Please provide (1) photographs of the fire damage (preferably dated), (2) a copy of the insurance claim or, if no claim was made, an explanation of why no claim was made, and (3) a copy of the police report from the Miranda State Police or comparable evidence related to their investigation of the fire.

We continue to request the information contained in our May 26, 2016 Disclosure Request for the two Venezuelan companies – Plasticos Hercules CA and Productos Hercules CA. We suggest that, if no longer available in paper form, documents be obtained in electronic form from computer backup systems, documents be requested and obtained from financial institutions (that maintain records of client bank statements and bank transactions), from tax authorities in relation to financial statements and tax filings, from local government authorities in relation to property ownership and assessed values, from insurance companies as to insured value of real property (including buildings, equipment, and inventory), from lenders and borrowers, from major customers in relation to sales and purchases volumes, and from records retained offsite in other locations, including at law firms, residences, rental / storage units, and other business premises.

[73] In his affidavit sworn March 15, 2017 (paragraph 48) the husband stated,

I have produced every document that I've been able to find. It needs to be understood that in Venezuela, records are not kept the same as in Canada and it is not always possible to get records from the government.

[74] In light of the expert’s detailed request as early as mid-December 2015 (if not earlier), the husband's response is disingenuous and revealing of his approach to discharging his disclosure obligations. It is unacceptable. And suspicious. It is inconceivable that none of the institutions with whom the husband or either of the Plasticos companies dealt (as noted in the second paragraph to the expert’s letter) retained any of information requested in the ordinary course of business.

[75] In Manchanda v. Theti[^32], Myers J. held that failure to provide timely, meaningful financial disclosure compliant with the Family Law Rules and proportional to the issues in a case undermined the administration of justice, and could no longer be tolerated. The husband’s appeal from the Order made striking his pleadings was dismissed by the Court of Appeal in language which highlighted the consequential severity of financial non-disclosure,

[13] … after continual admonitions by the courts and the legislature that parties to a matrimonial proceeding must produce financial documentation, willful non-compliance must be considered egregious and exceptional. This court has stated that the most basic obligation in family law proceedings is the duty to disclose financial information. The requirement is immediate and ongoing: Roberts v. Roberts, 2015 ONCA 450, 65 R.F.L. (7th) 6, at para. 11.) In 2015, Family Law Rule 13 was amended to emphasize a party’s financial disclosure obligations. A party’s non-compliance must be considered in the context of this strict financial disclosure obligation. Rule 1(8) provides the court with the authority to strike claims. Those who choose not to disclose financial information or to ignore court orders will be at risk of losing their standing in the proceedings as their claims or answers to claims may be struck.[^33]

[76] Without commenting at this time on the merits of the parties’ competing claims about the ownership of Plasticos Hercules, the disclosure requested from the husband about that company and Productos Hercules is, in my view, minimally critical to determining the parties’ net family properties in this case. This observation should in no way be interpreted as expressing an opinion about the balance of the disclosure requested in the Supplemental Disclosure Request. Or that the husband beneficially owns other properties. Questioning (if it proceeds) may assist in providing a more robust evidentiary record with which to better assess the relevancy and scope of the requested disclosure.

[77] The husband should be aware that this is a case not unlike Strauss v. Strauss[^34] wherein Czutrin J. observed that where a party’s extended family is involved in that party’s asset or income affairs that party “has the obligation to compel production from third parties…”, in that case the husband’s father, the father’s companies and two family trusts. The non-co-operative husband would be held accountable for the costs of any motions by the wife to compel third party disclosure.

[78] Accordingly, without prejudice to the balance of the wife’s disclosure requests as set out in her expert’s Supplemental Disclosure Request or as may arise from any questioning, the husband shall comply with the disclosure requested in paragraphs (16) and (17) of the letter dated January 27, 2017 from Froese Forensic to the wife’s counsel attached as Schedule “A” to the wife’s motion. This direction shall include the requests (1) to (3) as noted in the first paragraph of the expert’s letter referenced in paragraph [71] above. The husband has had plenty of time and opportunity to provide the disclosure requested or to undertake reasonable efforts to obtain that disclosure. He shall comply with this direction by October 16, 2017. In the event that the husband fails to provide any of the disclosure requested then he shall file in the Continuing Record by no later than October 31, 2017 an affidavit fully detailing all of his efforts and those of any other person, or persons, on his behalf to obtain and provide the disclosure. An affidavit from a third party (such as a clerk) will not be acceptable.

Disposition

[79] In accordance with the foregoing, the following Order shall issue:

1. the husband shall pay to the wife, on without prejudice basis, effective July 1, 2016 the sum of $50,000 monthly as and for child and spousal support;

2. the amount set out in (1) above is a combined, uncharacterized, sum for the husband’s child and spousal support obligations as those may be later allocated by a motions’ judge after questioning (if questioning proceeds) or, failing any motion to vary after questioning, by the trial judge, and does not take into account tax consequences for either party;

3. the award made is also without prejudice to any claim for support payable from and after the valuation date once that date is determined;

4. the husband’s request to vary or set aside the payment term of the Order made on October 26, 2016 is denied;

5. the husband shall fully comply with the payment term of the Order made on October 26, 2016 by September 29, 2017, with interest;

6. until such time as the husband complies with (4) above, he is prohibited from taking any further step in these proceedings;

7. in the event that the husband fails to comply with paragraph (5) above, the wife may move without further notice to the husband to strike his pleadings involving all financial issues between the parties;

8. the wife’s motion for interim disbursements is dismissed in accordance with paragraph [63] above;

9. the husband shall provide the disclosure as set out in paragraph [78] above by October 16, 2017, failing which he shall comply with the balance of the directions contained in that paragraph;

10. the wife may question the husband. At his expense the husband shall produce himself for questioning in the Greater Toronto Area on or before November 30, 2017 at a time and place to be chosen by the wife’s counsel;

11. the husband shall not be entitled to question the wife until 30 days after he has complied (8) above dealing with his disclosure, and then only after he has been questioned by the wife;

12. questioning of each party shall be limited to seven hours;

13. any issue with respect to (10) to (12) above dealing with questioning shall be referred to me or to the case management judge. These terms are without prejudice to any different Order with respect to questioning which the case management judge considers appropriate.

[80] Support Deduction Order to issue.

[81] If the parties are unable to agree on the costs of these Motions then the wife shall deliver and file in the Continuing Record her cost submissions by September 6, 2017 and the husband shall deliver his responding costs submissions by September 20, 2017. Any reply by the wife shall be filed by September 27, 2017. All costs submissions are to be no longer than five double-spaced pages (reply is limited to two double-spaced pages). Offers to Settle (if any), Bills of Costs and any authorities upon which either party may wish to rely shall also be filed no later than September 27, 2017 but not form part of the Continuing Record.

[82] Two final points.

[83] In her Ruling granting to Mr. Avan Certificates of Pending Litigation, Master Jolley noted[^35] that there were major issues in those proceedings which overlapped the proceedings in this court and observed that there was a possibility that the proceedings would be joined. In light of sections 2(1) and (2) of the Family Law Act[^36] dealing with combining proceedings so that spouses’ affairs be appropriately determined in the same forum, this commends itself.

[84] Lastly, the parties are urged to contact the filing office of this court to properly organize the Continuing Record and Endorsement Record Index so that they are consistent in their references to the pleadings filed, and to incorporate the documents filed shortly before and on the day when the motions were argued.

Justice D.A. Jarvis

Date Released: August 21, 2017

[^1]: Benarroch v. Abitbol et al, 2017 ONSC 4604 [^2]: Ibid, paras [1] to [17] [^3]: The husband pleaded that the parties separated on November 29, 2013. The wife claimed that they separated in March 2013. Nothing turns on this issue for the purposes of the motions before the court. [^4]: After the parties’ motions were argued, and the July 31, 2017 release of Kaufman J.’s ruling, Master Jolley granted Mr. Avan Certificates of Pending Litigation against the three Ontario properties owned by the parties either solely or jointly. Mr. Avan had obtained a $8,430,411.08 USD judgment against the husband. The case report did not disclose whether the husband defended the claim. The wife’s motion for Security for Costs was dismissed: Avan v. Benarroch et al., 2017 ONSC 4729. The motions before Master Jolley were argued on July 27, 2017. [^5]: Van v. Palombi, 2017 ONSC 2492 [^6]: Purcaru v. Purcaru, 2010 ONCA 92 [^7]: Knowles v. Lindstrom, 2015 ONSC 1408 [^8]: Teitler v. Dale, 2017 ONSC 428 [^9]: Bak v. Dobell, 2007 ONCA 304 [^10]: Korman v. Korman, 2015 ONCA 578 [^11]: supra #8, para. 75 [^12]: Husband’s affidavit sworn March 15, 2017, para. 28 [^13]: Virc v. Blair, 2017 ONCA 394 [^14]: Family Law Rules, O. Reg. 114/99 [^15]: How this amount relates to the “Details” box adjacent to this entry is unclear and otherwise unexplained in any affidavit. [^16]: This suggests that there is no interest claimed or claimable. There was no evidence before the court about any interest factor or interest claim. [^17]: Noted as “Current”. [^18]: Also noted as “Current”, even though the amount of the original loan to the father, Jacob Benarroch, is the same figure in the two financial statements. [^19]: The April 25, 2017 exchange rate was 1.36 which would have resulted in a higher adjusted figure. The husband’s earlier rate is used for consistency. [^20]: The wife’s Answer does not respond to paragraphs 66 to 68 of the husband’s IMPORTANT FACTS in his Application. The husband repeated this allegation in his March 15, 2017 affidavit. The wife has never disclaimed this allegation, although her expert requested disclosure from the husband dealing with the gold and silver purchases. [^21]: Stuart v. Stuart, 2001 CanLII 28261 (ON SC), [2001] O.J. No. 5172 (S.C.J.). See also Ludmer v. Ludmer, [2012] O.J. No. 3681, 2012 ONSC 4478, 25 R.F.L. (7th) 397, 2012 CarswellOnt 9702 [^22]: The funds were intended for a review of a business valuation report by the husband’s expert. [^23]: Rule 2(2) [^24]: Rule 2(3) [^25]: supra #13, para. 9 [^26]: Romanelli v. Romanelli, 2017 ONSC 1312 [^27]: Chiaramonte v. Chiaramonte, [2012] O.J. No. 58, 2015 ONSC 179, paragraphs 63 and 65 [^28]: Turk v. Turk, [2016] O.J. No. 3439 [^29]: Woodburn v. Woodburn, [2016] O.J. No. 5754 [^30]: In his affidavit sworn December 2, 2015 (para. 67) the husband stated that he was aware of the November 23, 2015 disclosure request. It is a reasonable inference that the request was made known to the husband through counsel shortly after its date, then formally served with the Answer two weeks later. [^31]: Froese Forensic Partners Ltd.’s letter to Respondent’s counsel dated January 27, 2017. [^32]: Manchanda v. Thethi, 2016 ONSC 3776 [^33]: Manchanda v. Thethi, 2016 ONCA 909 [^34]: Strauss v. Strauss, [2012] O.J. No. 884, 2012 ONSC 1022 [^35]: supra #3 at para. 64 [^36]: R.S.O. 1990, c. F. 3 as amended.