Court File and Parties

COURT FILE NO.: FS-14-398663 DATE: 2018/10/01 SUPERIOR COURT OF JUSTICE - ONTARIO

BETWEEN: Nicole Peerenboom, Applicant AND: Robert Peerenboom, Respondent, and Harold Peerenboom, Respondent

BEFORE: Moore J.

COUNSEL: Dani Z. Frodis, for Nicole Peerenboom Nancy Tourgis, for Robert Peerenboom Symon Zucker, for Harold Peerenboom

HEARD: September 27 and 28, 2018

Endorsement

MOORE, J.

[1] The applicant, Nicole Peerenboom (“Nicole”), brings this motion, returnable at the commencement of trial, for:

1. an order striking the respondent, Robert Peerenboom’s (“Robert”) pleadings as a result of his history of non-compliance with court orders and the Family Law Rules and his ongoing failure to comply with the Following Orders:

i. Paragraph 1 of the order of Justice Hood dated December 18, 2017, which required Robert to pay Nicole interim costs and disbursements in the amount of $150,000, plus applicable interest;

ii. Paragraph 1 of the order of Justice Hood dated February 7, 2018, which required Robert to pay Nicole costs in the amount of $6,750, plus applicable interest;

iii. Paragraph 1 of the endorsement of Justices Then, Low and Myers dated August 29, 2018, which required Robert to pay Nicole costs in the amount of $11,500;

iv. Paragraph 4 of the order of Justice Goodman dated November 10, 2015, which required Robert to produce copies of minute books and financial statements for Mandrake Management Consultants on or before November 20, 2015; and

v. Paragraph 5 (Part 3, page 8) of the Trial Scheduling Endorsement of Justice Moore dated October 2, 2017, which required Robert to provide updated disclosure of the financial matters addressed in the Order of Justice Goodman dated November 10, 2015 by 30 days before trial.

2. If necessary and in the event that Harold Peerenboom’s (“Harold”) Answer dated August 24, 2018 has been filed despite his non-compliance with r. 10(1) of the Rules, an order striking Harold’s pleadings pursuant to r. 10(5) and 1(8.4) of the Rules as a result of his failure to serve and/or file his answer until three weeks before trial and ten months after being served with Nicole’s Amended-Amended Application;

3. An order that the trial of this matter shall proceed on an uncontested basis on terms to be directed by Justice Moore;

4. Costs of this motion on a full recovery basis plus applicable HST; and

5. Such further and other relief as counsel may advise and this Honourable Court deems just.

[2] Nicole’s motion materials were delivered on September 7, 2018. Robert and Harold’s responding materials [1] were delivered on the morning of the motion date, September 26, 2018. Robert and Harold’s responding materials were late. Rule 14(11.3) of the Family Law Rules [2] states that a response to a motion shall be served and filed not later than four days before the motion date. But Nicole preferred to have the motion determined upon its merits, given the significance of the relief sought. As such, I accepted the late materials, and scheduled and heard oral submissions.

[3] For the sake of further context, I note that the parties appeared before me on March 5, 2018 for a trial management conference in this matter and in a related civil matter [CV-16-00554084]. Upon completion of that conference I endorsed trial dates for the two matters such that upon completion of the trial in the civil matter, the family matter would proceed immediately thereafter, with both matters to be tried before me.

[4] On March 8, 2018, Justice Matheson heard and determined Robert’s motion to stay the December 18, 2017 order of Justice Hood requiring him to pay Nicole interim costs and disbursements in the amount of $150,000, plus applicable interest, pending determination of his application for leave to appeal that order. Justice Matheson granted a stay of that order until disposition of the motion for leave to appeal and directed that the appeal proceedings be expedited.

[5] On April 5, 2018, Justices Thorburn, McKelvey and Myers granted leave to appeal with costs of the motion reserved to the panel hearing the appeal in Divisional Court.

[6] On August 29, 2018, Justices Then, Low and Myers dismissed the appeal with reasons to follow and awarded costs to Nicole in the amount of $11,500, inclusive of all motions in the appeal proceedings.

[7] The trial of the civil matter, having been heard over six days in September and October 2017 and on one day in January 2018 and thereafter adjourned, recommenced on September 12, 2018 and continued through thereafter until September 25, 2018.

[8] At no time before the commencement of the civil trial nor thereafter until the commencement of the trial of the family matter did Robert fully pay all of the interim costs and disbursements award ordered by Justice Hood, or the cost orders referred to above [3], or comply with all of the disclosure orders referred to above.

Robert’s Failure to Comply with Court Orders

[9] The Family Law Rules detail the consequences that may follow upon the party’s failure to obey a court order in a case or, as in this instance, a related case. Rule 1(8) provides that:

If a person fails to obey an order in a case or a related case, the court may deal with the failure by making any order that it considers necessary for a just a determination of the matter, including:

a) an order for costs;

b) an order dismissing a claim;

c) an order striking out any application, answer, notice of motion, motion to change, response to motion to change, financial statement, affidavit, or any other document filed by a party;

d) an order that all or part of the document that was required to be provided but was not, may not be used in the case;

e) if the failure to obey was by a party, an order that the party is not entitled to any further order from the court unless the court orders otherwise;

f) an order postponing the trial or any other step in the case; and

g) on motion, a contempt order.

[10] Nicole points to Robert’s breaches of the several court orders detailed above. She also refers to his failure to comply with earlier orders in these proceedings by Justice Stevenson (June 16, 2016 and July 13, 2016) for over six months. He finally complied with those orders after a motion for non-compliance was brought against him, but before it was argued.

Overview of Case Law - Striking Pleadings for Failure to Comply with Court Orders

[11] In support of her request for an order striking Robert’s Answer, Nicole cites and relies on several cases in which courts have granted such orders.

[12] In Levely [4], Justice Chappell heard an interim motion prior to trial and wrote:

12 Family Court proceedings are intended to be a means by which aggrieved parties can have their disputes arising after separation adjudicated upon by the court in a just, efficient and timely manner. Unfortunately, they all too often become a destructive tool which one party wields and manipulates in order to create further financial and emotional hardship for the other party. The frequency with which Family Law litigation degenerates into an abusive game of delay tactics, stonewalling and dodging of judicial authority is a concern which must remain at the forefront of the judge’s mind in considering remedies for a party’s failure to participate as required in court proceedings or to comply with court orders. Family Law litigants who come to the court for assistance must come with a strong sense of assurance that the process will be an effective means of mending and stabilizing the family fabric, rather than a futile money pit of failed justice. The court has a critical responsibility and role to play in ensuring that proceedings which are intended to protect families and lead to resolution of pressing and emotionally divisive issues are not hijacked by a party and transformed into a process for further victimizing the other party and the children in their care.

13 … Judicial response to a party’s failure to respect the court process and court orders should be strong and decisive. The judge should be as creative as necessary in crafting remedies so as to ensure that the noncompliance identified and the resulting damage to the other party are addressed as fully, justly and quickly as possible.

[13] Although Levely predates the Family Law Rules in their current form and content, the observations made by Justice Chappell ring as true today as they did when he wrote that decision.

[14] More recently, Gordon [5] addressed the failure of a party to comply with court orders by saying:

Court orders are not made as a form of judicial exercise. An order is an order, not a suggestion. Non-compliance must have consequences. One of the reasons that many family proceedings degenerate into an expensive merry-go-round ride is the all-too-common casual approach to compliance with court orders.

[15] In Henderson [6], Justice Victoria Starr detailed a litigation history including over 14 attendances before the court and extensive examples of failure on the part of the respondent to comply with court orders and timelines for disclosure. Ultimately, the applicant brought her motion to strike the respondent’s pleadings. He filed no responding materials to the motion. He attended on the motion and confirmed to the court that he had not provided any of the disclosure he claimed was ready and had not brought whatever documents he said were ready with him.

[16] Her Honour reviewed the applicable law and confirmed, at paragraph 43:

I am guided primarily by the principles enunciated by the Ontario Court of Appeal in a number of cases. Those principles are well summarized by O’Connell J. in the very recent case of Lahey v. Gauthier, 2015 ONCJ 393 at paragraphs 41-46:

41 In a number of decisions, the Ontario Court of Appeal has made it clear that the power to strike out a party’s pleadings should be used sparingly and only in exceptional cases. See Roberts v. Roberts, 2015 ONCA 450, [2015] O.J. No. 3236, 2015 CarswellOnt 9247 (Ont. C.A.). In Chiaramonte v. Chiaramonte, 2013 ONCA 641 (Ont. C.A.), the Court held that in family law cases, pleadings should only be struck, and trial participation denied, in exceptional circumstances and where no other remedy would suffice, following the court’s decision in Purcaru v. Purcaru, 2010 ONCA 92, 75 R.F.L. (6th) 33, at paragraph 47. The exceptional nature of this remedy is rooted in the significance of the adversarial system, as this Court recognized in Purcaru, supra, at paragraph 49 of that decision:

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.

42 In Chiaramonte v. Chiaramonte, supra, the Court of Appeal went on to say as follows at paragraph 32 of that decision:

Striking a party’s pleading is a drastic remedy that should only be applied in exceptional circumstances. The rules authorizing this remedy must be interpreted in light of the draconian effect of rule 10(5)(b). That rule provides that a Respondent whose answer has been struck is not entitled to participate in the case in any way. For example, in Kim v. Kim, 2001 CarswellOnt 502 (ONSC), on the basis of rule 10(5)(b), an uncontested hearing was held on custody, support and property without further notice to the party whose pleadings had been struck. Similarly, in Costabile v. Costabile, 2004 CarswellOnt 4860 (ONSC), a party whose pleadings had been struck was not entitled to notice of further proceedings nor was he entitled to participate in any way.

[17] Justice Victoria Starr went on to observe, and I agree, that where custody and access interests are involved, the court should avoid the sanction or use utmost caution in striking pleadings because the trial court needs participation of both parties and information that each can provide about best interests. A full evidentiary record, including the participation of both parties is generally required to make a custody decision in the best interests of the children. [7]

[18] In the instant case, however, the parties have resolved parenting issues for the four children of the marriage, who range in age from 7 to 13. The remaining issues for trial are, according to Nicole’s Written Opening Statement, filed September 14, 2018, principally financial issues including: the determination of appropriate levels of child support commensurate with Robert’s income, retroactive and ongoing; spousal support, retroactive and ongoing; medical and dental benefits; life insurance; property and equalization issues.

[19] Robert argues that the best interests of the children are at stake in this trial because if a high income is imputed to him and he is unable to pay his support obligations, he could lose his license and go to jail, which would result in the children losing their father and their access to his financial means. Justice Starr explicitly stated in Henderson that crafting an order to strike pleadings could address the best interests of the children:

63 The only way I see to strike the balance between these objectives, the Respondent’s right to participate in the adversarial process so as to prevent injustice to him, and the Court’s goal of promoting the best interests of his children through adequate child support and appropriate custody and access orders, is to craft an order that persuades the Respondent to comply with the court orders. In this case, this is achieved by striking his pleadings in their entirety but on a without prejudice basis to his right to:

a. Seek, on motion made on notice, to have them re-instated once he has fully complied with the court orders that have been made. This will strike the necessary balance of providing a serious consequence to the Respondent’s ongoing lack of compliance and still permit him, should he do so quickly, to participate in these proceedings before they are concluded…

[20] In any event, the possibility of eventual implications upon the children of Robert’s non-compliance with court orders for payment is too remote to be persuasive on this motion.

[21] Justice Victoria Starr also noted [8] that in Kovachis v. Kovachis, 2013 ONCA 663, the court held that on a motion to strike the parties’ pleadings in a family law case because of non-compliance with court orders, the court must consider whether the default is wilful and whether striking the pleadings is the only appropriate remedy. The Court of Appeal emphasized that striking pleadings is a remedy of last resort, and stated that in exercising the discretion to strike pleadings, a court has the jurisdiction to order the reinstatement of pleadings on conditions. In Costabile v. Costabile, 2005 CarswellOnt 6909 (C.A.), the court upheld the lower court’s decision to strike the appellant’s pleadings as the judge contemplated that the appellant would have the right to move to set aside the default and to try to persuade a Family Court judge that his disclosure and efforts in providing disclosure justified reinstating his pleading. The Court of Appeal opined that this was “a sensible resolution of the matter” and given the broad discretion under the Family Law Rules, the Court also held that a Family Court judge had jurisdiction to make such an order.

[22] More recently, in Manchanda [9], Justice Myers questioned the degree to which striking of pleadings should still be reserved for drastic and extreme cases and I accept and value his views:

75 Moreover, I respectfully question the degree to which striking of pleadings should still be reserved for drastic and extreme cases. How many orders does a party get to breach on top of ignoring the primary objective that requires early, voluntary, and complete disclosure without an order even being made? It is not the remedy that should be exceptional. Rather, it is the continued existence of cases with parties who ignore their disclosure obligations that ought to be exceptional. The remedy will become exceptional when the Rules are followed and enforced as written and as interpreted. That is, once cases with non-disclosure issues are exceptional, then the need to consider striking pleadings for non-disclosure too will be exceptional. Failing to provide consequences however is tacit, if not explicit, permission to continue the course that countless courts have already said is inappropriate. Deferred disclosure, delayed disclosure, and non-disclosure cannot be accepted as normal, tactical give and take in 2016.

[After referring to paragraph 12 of Levely, cited above, His Honour continued:]

77 Implementing a culture shift to enhance access to justice by promoting efficiency, affordability, and proportionality requires the court to re-draw the line between limiting drastic measures and applying the law robustly. In my respectful view, a little less judicial diffidence, a little less reluctance to hold accountable those who would deny justice to their former spouses, and a little more protection of abused parties from abusers, might be a better fulfillment of our critical responsibility as so aptly phrased by Justice Chappell. After 17 years, it is time for the court’s words were taken to mean what they say.

[23] The Court of Appeal affirmed Justice Myers’ ruling, adding at paragraph 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. Manchanda v. Thethi, 2016 ONCA 909, 84 R.F.L. (7th) 374 at para. 13.

[24] The Court of Appeal’s earlier statements about the exceptional status of striking pleadings for non-compliance with court orders or disclosure obligations must therefore be read with this more recent interpretation in mind.

Failure to Comply with Orders and Obligation for Financial Disclosure

[25] On the matter of failure to comply with orders for financial disclosure, the only issues remaining in Nicole and Robert’s case, Henderson [10] confirms that where financial disclosure orders are violated, courts have struck pleadings on financial issues and have permitted parenting issues to continue. See: Sleiman v. Sleiman (2002), 28 R.F.L. (5th) 447 (Ont. C.A.).

[26] Robert was ordered by Justice Goodman to disclose information about his property, and he has also an obligation under the Family Law Rules to disclose that information. Rule 13(3)(8) required Robert to disclose the previous three years’ financial statements for any privately held corporation and its subsidiaries that he has an interest in no later than 30 days after the day his financial statement is required to be served. Rule 13(3)(9) required him to disclose a copy of the trust settlement agreement and the trust’s financial statements for each of the previous three years. Nicole points out that Robert, as a beneficiary of the Peerenboom Family Trust, is subject also to this obligation. To date, Robert has not properly valued his equity in:

• 44 Old Forest Hill Road, a property he owns in Toronto,
• The shares that he owns of Mandrake Management Consultants,
• The shares that he owns in the corporation(s) that own and operate the Crestwood Schools, or
• The shares of the numbered company that he wholly owns.

[27] Despite my trial scheduling directions, Robert has also not yet delivered a net family property statement, and only produced an updated financial statement midway through his counsel’s responding submissions on this motion.

[28] Rule 13(15) states that as soon as a party discovers that a document that he or she has served under this rule is incorrect, incomplete or out of date, the party shall serve on the other party/parties and, if applicable, file, a corrected, updated or new document as the circumstances require. In this connection, it must be said that not only has Robert failed to comply with court orders, he has also allowed his various financial statements to have been delivered with incomplete and inaccurate information within them.

[29] Robert has filed affidavits on this motion sworn by the chief financial officer of Mandrake Management Consultants [11], the accountant for Harold and his group of companies [12] and by the controller of Mandrake Properties Inc., a company solely owned by Harold, [13] all of which purport to opine on matters affecting the value of companies that Robert has shareholdings in. Their opinions are not expert valuation evidence admissible on this motion.

[30] Robert argues that the board of Mandrake Management Consultants refuses to release its financial statements to him. This is not a sufficient excuse. In Di Luca v. Di Luca, 2004 5044 (ON SC), 1 R.F.L. (6th) 162 (Ont S.C.J) at paragraphs 12-15, Stewart J. held that if it is necessary to obtain information in the possession of a third party in order to discharge the obligation to make full financial disclosure, then steps should be taken by the party upon whom the obligation to disclose rests to do so. Stewart J. specifically addressed the argument Robert makes, writing, “In the family law context, where early and complete financial disclosure is not only encouraged but demanded, I am of the opinion that a party who has been unable to obtain access to the documents and information necessary to comply with that obligation must resort to a motion under Rule 30.10 to gain access to the necessary material and cannot say that the opposing party is obligated to do so… If those third parties continue to refuse to provide the documentation and information necessary to allow [the spouse with the obligation to disclose] to comply, she must seek an order of the Court to compel production.” It was part of Robert’s obligation under the Family Law Rules to seek an order of the court to compel disclosure from Mandrake Management Consultants and the other corporations noted above.

[31] With regard to Robert’s argument that the house and corporate interests are excluded property, either under the domestic contract or the Family Law Act and therefore do not need to be valued, I agree with the analysis and conclusions of Kiteley J. in Montemarano [14]. In that case, the respondent’s expert valued the respondent’s corporate interests at zero on the basis that they were excluded assets protected in a marriage contract. The case is relevant to this motion because Her Honour found that the marriage contract is not an answer to the issue of valuation of assets. Even if the marriage contract prevails and all of the corporate assets and related entities are excluded from the value of his property in calculating equalization, the value of those assets and related entities are still relevant to the question of Robert’s ability to pay spousal support and money awarded to Nicole in court orders.

[32] In addition, Her Honour determined that to fulfil his obligation to disclose and his obligation to provide values of his assets, the respondent must provide a fair market valuation. Not only does the respondent have the obligation to provide such a report, it will be more efficient if he is responsible to prepare the report since he has or has access to all of the information required to prepare a fair market value of his business interests.

[33] Robert has not provided appropriate expert valuation evidence as has been required of him by the Family Law Rules and order of this court.

Failure to Comply with Costs Orders

[34] Nicole has filed a very recent decision of Justice McDermot arising from a motion at the commencement of trial to strike the respondent’s pleadings for failure to provide disclosure and pay costs. In that case, [15] the respondent failed to comply with court orders and had ended up before the court on several previous occasions because of this. He was warned that his pleadings may be struck but his non-compliance continued. At paragraph seven, his Honour observed that striking pleadings is a serious remedy; it removes a party from the litigation and prevents that party from having his or her side of the story placed before the court. The court must use caution in doing so, especially on the eve of trial.

[35] He continued, at paragraph eight, saying, “That being said, it is a serious business to breach a court order or court orders, something that Mr. Milutinovic acknowledges that he has done. This is especially so, where we are on the first day of trial and the respondent has not provided the disclosure that he was obligated to do by various court orders made throughout these proceedings: see Talisman v. Stryjak, 2015 ONSC 549. And to make this more egregious, it is more than justified where child support is an issue and the court is left without the ability to determine the respondent’s income to pay that child support: see Henderson v. McLean, 2015 ONSC 533.”

[36] Then, at paragraphs 14 and 15, Justice McDermot states:

“We are now at court at the commencement of the trial of the financial issues in this matter. I can only characterize Mr. Milutinovic’s failure to request the release of funds to his accountant and lawyer until now as a betrayal of the trust that Bennett J. placed in him in February of this year. If Mr. Milutinovic cannot be bothered to act on a timely basis to obtain the evidence that he needed at this trial, I do not see how he can ask his wife to undergo the costs of a full trial of the financial issues before the court. This is especially so where the information requested is in the hands of the support payor, Mr. Milutinovic, and it is his job to disclose his income in a proper fashion so that child support and spousal support can be set… This is compounded by the fact that Mr. Milutinovic has not complied with the trial directions in McGee J.’s trial scheduling conference endorsement made in November, 2017. He has not provided an updated financial statement by April 3, 2018 as ordered by her.”

[37] His Honour determined that the respondent’s breaches were intentional and wilful, struck his pleadings and specifically his Answer and directed that the respondent was not entitled to participate in the trial in any way or to cross-examine any witnesses or to give evidence unless called as a witness for the applicant.

[38] Applying all of this to Robert, it is clear upon the evidence on this motion that Robert’s ill-explained defaults in complying with court orders are wilful. I am not persuaded that Robert has made, as he suggests, best efforts to satisfy the orders. Given the imminence of the commencement of the family trial and the estimates of all three counsel that the family trial will require about two weeks of trial time, Robert has precious little time remaining to bring himself back into good standing in order to justify reinstating his pleadings, if indeed they are to be struck and then be able to ask to participate in the trial.

[39] Robert submits that he has made best efforts to satisfy the order of Hood J. but does not have or have access to sufficient funds in order to do so fully. However, he has previously asserted impecuniosity in affidavits delivered on four separate occasions between November 2015 and November 2017 [16]. This court did not accept his assertions or grant him relief from his obligation to honour court orders and pay the amounts owed thereby.

[40] Robert’s ability to pay was at issue in several hearings in this court and the court specifically rejected his submission that he was destitute and without access to resources to pay amounts of money ordered. Justices Stevenson, Molloy, Hood and Horkins heard and rejected this submission based on evidence similar or in some cases identical to the evidence before this court. Robert appealed Justice Hood’s December 18, 2017 order for interim costs and disbursements, partially on the basis that Justice Hood had erred in finding that he was not destitute. He was unsuccessful before a panel of the Divisional Court, which found that “there was evidence before the motions judge… capable of supporting the finding that the appellant had either resources or access to resources to pay interim costs.” [17]

[41] Notably, Harold delivered an affidavit on November 10, 2017 in which he swore that he had no intention of advancing any further funds to Robert [18] but by loan agreement dated May 10, 2018, Harold loaned Robert further funds.

[42] Regardless, the law is clear that claimed impecuniosity is not a defence to an application to strike pleadings based on a failure to honour court orders. The ability to pay may be relevant in submissions offered at the time the order is made but not when non-compliance is the issue. [19]

Other Remedies in lieu of Striking Pleadings

[43] It is Nicole’s submission that this is an appropriate case to strike Robert’s pleadings, and that it is the only remedy that will suffice in the circumstances. She adds that it is clear that Robert has no intention of complying with the court orders for interim costs and disbursements [despite his appeal having been dismissed], or disclosure. She argues that there must be consequences for Robert’s actions. She submits that her financial circumstances are dire and her ability to proceed with this litigation has been severely and directly prejudiced by Robert’s failure to make court ordered payments totaling $168,250 [20], plus interest. She insists that it is in the interest of justice that Robert’s pleadings be struck. She submits that at this very late stage, following multiple previous adjournments of the family law trial and in light of Robert’s history of delay, any further adjournment to allow Robert additional time to comply would only serve his agenda and further victimize her.

[44] Robert suggests only one alternative remedy: that Nicole’s motion to strike be dismissed on the term that he must list and sell 44 Old Forest Hill Road and pay the proceeds of sale, net after fees and mortgage indebtedness, into court to satisfy the outstanding cost orders. However, one of his own three affidavits filed on this motion describes his previous unsuccessful attempts to sell the house at prices lower than what he now believes it is worth. An exhibit to his affidavit shows that 44 Old Forest Hill Road was listed for sale three times in 2011 and 2012 for periods ranging from 123 to 206 days before the listing expired. There is also the issue of whether Nicole, who has a matrimonial home designation on the house, would consent to a sale, given that part of her claim in this proceeding is her entitlement to 44 Old Forest Hill Road. Even if Nicole would consent, there is no guarantee as to whether the house would sell, how long that might take, or for what amount. This remedy would also leave the disclosure issues unaddressed. The Court can take no comfort from this proposed term.

[45] I agree with Nicole’s submissions. Robert’s failures to comply with court orders must also be viewed in the broader context of his previous compliance or non-compliance with costs awards and disclosure. As noted above, Robert has previously ignored orders to pay Nicole. He did not pay Justice Stevenson’s interim disbursement award and related costs order, dated June 16, 2016 and July 13, 2016, until January 2017, after Nicole brought a motion to strike his pleadings. With regard to the costs and disbursement orders at issue in this motion, he has again only made efforts to pay in response to a motion to strike. [21] To his credit, he has provided or promised to provide $40,500 to Nicole in satisfaction of the costs and disbursements orders. However, $127,750 remains still owing. There is no reason why he should have waited until Nicole’s motion to strike his pleadings was brought to inquire into his finances and discover this $40,500.

[46] Robert has also not yet obtained a professional valuation of 44 Old Forest Hill Road, or the shares listed above. He has not made an effort to bring a motion against Mandrake Management Consultants for third party disclosure to obtain the information necessary to value his equity in it. He has not yet delivered a net family property statement. A substantial amount of Robert’s financial disclosure is missing.

[47] Rule 2(2) of the Family Law Rules states that “the primary objective of these rules is to enable the court to deal with cases justly.” Echoing Justice McDermot at paragraphs 14 and 15 in Milutinovic, quoted above, I do not see how Robert can ask his wife to undergo the costs of a full trial of the financial issues before the court, when he has not complied with trial directives, shows no inclination to fully pay costs, and refuses to provide information about the value of assets that are in his hands so that child and spousal support can be properly set. I do not think it would be just to ask her to do so.

[48] In response to the submission that Robert’s voice will not be heard in this proceeding if his pleadings are struck, I note that it appears there is good reason to believe that Nicole’s counsel will call Robert to give testimony. Robert’s evidence from the civil trial may also form part of the record in this case. It is likely that, in addition to his updated financial statement and all the other evidence Nicole will put in, there will be firsthand evidence from Robert about his income before the court.

[49] In Kovachis [22], as is noted above, the Court of Appeal emphasized that striking pleadings is a remedy of last resort but the court has discretion to allow pleadings to be reinstated upon conditions. As such, I order that Robert’s pleadings be struck and that the trial of this matter shall proceed on an uncontested basis but that upon payment in full of all of the above noted interim costs and disbursements order and all other costs orders and completion of appropriate steps to address his outstanding non-compliance in respect of financial disclosure and asset valuations, Robert may apply to have his pleadings reinstated and upon that application, I will receive submissions from Robert and from Nicole on whether or to what extent Robert’s application shall be weighed against any ongoing failure on his part to comply with his obligation to provide full financial disclosure and asset valuations.

Harold’s Late Service of an Answer

[50] Nicole points to rule 10(1) of the Family Law Rules, which provides that a person against whom an application is made shall serve an Answer within 30 days after being served, and rule 10(5), which provides that the consequences of failure to comply are incorporated by reference into rule 10(5) from those stated in rule 1(8.4) including that: the party is not entitled to any further notice of steps in the case; the party is not entitled to participate in the case in any way; the court may deal with the case in the party’s absence; and a date may be set for an uncontested trial of the case.

[51] Nicole submits that Harold should have his Answer struck as a result of his failure to deliver his Answer until three weeks before trial and ten months after being served with Nicole’s Amended-Amended Application. She points out that Harold’s Answer was served nine months after the deadline for pleading had passed and Harold has never requested an extension of time to plead. In addition, she points out that Harold has not provided any viable explanation for his unreasonable delay and it would be extremely prejudicial to Nicole if Harold was able to participate and rely on his Answer at trial, particularly when he is attempting to plead new claims against Nicole on the eve of trial.

[52] Nicole also references Fakeiry [23], a case in which McDermot J. determined a motion which he described as, essentially, a motion for dismissal of an application after the parties had done nothing during a five-year period. The respondents argued that, because of the delay, their positions had been prejudiced to the extent that the claims against them should be dismissed. Nicole relies on McDermot J.’s statement at paragraph 34 that, “I am of the opinion that there is jurisdiction in the family law context to strike certain Applications if I find that there is an unreasonable and unexplained delay which causes undue prejudice to the moving party.” Nicole submits that this supports her proposition that family law pleadings may be struck if they are served and filed late.

[53] However, the context of Fakeiry was significantly different from the context of this case. In Fakeiry, it was the applicant’s pleadings at issue. She had failed to prosecute her case, delaying the application for five years. That delay resulted in prejudice to the respondents in the form of memories fading over the years, limitations periods expiring, and evidence becoming unavailable. [24] In this case, Harold is a respondent. His delay in filing and serving his Answer did not delay the scheduling/hearing of the trial. The prejudice that Nicole alleges arises from new claims pleaded on the eve of trial, rather than the forms of prejudice which arose in Fakeiry. The delay and prejudice in Fakeiry differ from those found in this case.

[54] Nicole points out that Harold is seeking new relief in his pleading, including an order that Nicole satisfy the judgement and writ of execution from the proceeds of sale of the property [despite the fact that the default judgement was only obtained against Robert], an order declaring that Nicole is not a titled spouse and not granted an interest in the home, and an order declaring the loss of her possessory rights as against Robert.

[55] Given the proximity to trial, Nicole insists that the new claims pleaded and the fact that Harold has not provided a reasonable explanation for his delay would make it extremely unfair and prejudicial to her if Harold were able to participate and rely on his Answer at trial.

[56] When read together, Nicole insists that the consequences of rule 10(1), 10(5) and 1(8.4) apply, and this is not an appropriate case for the court to make an exception. I disagree. I see no prejudice to Nicole by allowing Harold to defend her claims against him.

[57] This said however, at this late date, Harold cannot be allowed to raise new claims against Nicole in his Answer. She has not had time to consider how to deal with these claims on their merits. To the extent that Harold’s Answer raises new claims, those portions of his Answer are hereby struck.

Orders to go:

a) Robert’s pleadings are hereby struck and the trial of this matter shall proceed on an uncontested basis but, that upon payment in full of all of the above noted interim costs and disbursements order and all other costs orders and completion of appropriate steps to address his outstanding non-compliance in respect of financial disclosure and asset valuations, Robert may apply to have his pleadings reinstated and upon that application, I will receive submissions from Robert and from Nicole on whether or to what extent Robert’s application shall be weighed against any ongoing failure on his part to comply with his obligation to provide full financial disclosure and asset valuations.

b) To the extent that Harold’s Answer raises new claims, those portions of his Answer are hereby struck, including his claims 1-4 on page 4 of his Answer.

c) Costs of this motion shall be determined as part of overall costs following completion of the trial.

Moore J. Date: October 1, 2018

Footnotes

[1] One affidavit for Harold and seven affidavits for Robert. Counsel for the Peerenboom’s each undertook to deliver a factum later on that day and did so. A responding affidavit was filed for Nicole. The motion was adjourned to September 27, 2018 for oral submissions.

[2] O. Reg 114/99, r. 14(11.3)

[3] His accountant deposed that Robert recently instructed him to write a cheque from Robert’s numbered company’s account to Nicole’s counsel in trust in the amount of $30,000 toward the money ordered by Hood J. Robert also deposed in one of his affidavits dated September 25, 2018 that he is intent on making a further payment of $10,500 to Nicole in partial compliance with the order of Hood J.

[4] Levely v. Levely, 2013 ONSC 1026 at paras. 12 and 13

[5] Gordon v. Starr (2007), 42 R.F.L. (6th) 366 (Ont. S.C.) at para. 23

[6] Henderson v. McLean, 2015 ONCJ 533 at paras. 41, 42

[7] Supra, at para. 43

[8] Supra, at para. 43

[9] Manchanda v. Thethi, 2016 ONSC 1679 at paras 75 and 77

[10] Supra, at para. 43

[11] Robert Sjolin, affidavit sworn September 21, 2018

[12] Steven Michael Rose, sworn September 20, 2018

[13] Brian Clements, affidavit dated September 25, 2018

[14] Montemarano v. Montemarano, 2018 ONSC 1481, at paras 45-48

[15] Milutinovic v. Milutinovic, 2018 ONSC 3344

[16] November 17, 2015 at para 46; March 23 2016 at para 16; November 3, 2016 at para 11; and November 10, 2017 at para 3.

[17] Peerenboom v. Peerenboom, 2018 ONSC 5118 at para 41.

[18] See para 17.

[19] Gordon v. Starr, supra, at para 19, confirmed in Johanns v. Fulford, 2011 ONCJ 781 at para 20 and Quinn v. Nicholson, 2013 ONSC 245 at paras 17 and 22.

[20] Less any amounts he has recently paid.

[21] See for example the endorsement of Horkins J. dated January 31, 2017

[22] Kovachis v. Kovachis, 2013 ONCA 663

[23] Fakeiry v. Fakeiry, 2012 ONSC 7233 at para. 1

[24] Supra, at para 40.