COURT FILE NO.: FS-10-363621-0003 DATE: 20190426 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

C.A. Applicant – and – K.G. Respondent

Counsel: Michael Zalev, for the Applicant K.G., acting in person

HEARD at Toronto: April 9, 2019

Reasons for judgment C. HORKINS J.

Introduction

1The applicant mother C.A. and the respondent father K.G. were married in 2002 and separated in 2010. They have two children.

2On April 3, 2014, the parties settled all of their issues and signed Minutes of Settlement. The Minutes of Settlement were reflected in the final court order of Justice Frank dated April 7, 2014 (“Frank order”).

3On January 10, 2017, K.G. issued a motion to change the Frank order. This motion has not been heard.

4C.A. brings a motion to strike K.G.’s motion to change. Alternatively, she asks the court to stay his motion until he complies with outstanding orders. If he does not comply within a fixed period of time, she asks that the motion to change be struck. C.A. states that for many years K.G. has misled her and the Court and has repeatedly breached court orders. As a result of this long standing pattern of behaviour, C.A. says that the relief requested is justified.

Legal Framework

5Rules 1(8) and 1(8.1) of the Family Law Rules, O. Reg. 114/99 give the Court broad discretion to deal with a party's failure to obey an order or noncompliance with the rules as follows:

1(8) 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 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 a 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.

(8.1) If a person fails to follow these rules, the court may deal with the failure by making any order described in subrule (8), other than a contempt order under clause (8) (g).

[Emphasis added]

6The wording of rule 1(8) is sufficiently broad to allow a court to stay a proceeding when justified (Bourassa v. Magee, 2014 ONCJ 393 at para. 28).

7On a motion to strike a pleading for non-compliance, the court must first be satisfied that there is a triggering event that allows a consideration of rule 1(8). Once satisfied, the court may have recourse to the remedies in rule 1(8).

8When dealing with non-disclosure, the court should consider the factors set out in Mullin v. Sherlock, 2018 ONCA 1063, at para. 45 (“Mullin factors”):

• the relevance of the non-disclosure, including its significance in hindering the resolution of issues in dispute;
• the context and complexity of the issues in dispute, understanding that an uncomplicated case should have little tolerance for non-disclosure, whereas a case involving extensive valuation of assets may permit some reasonable delay in responsiveness;
• the extensiveness of existing disclosure;
• the seriousness of efforts made to disclose, and the explanations offered by a defaulting party for the inadequate or non-disclosure; and
• any other relevant factors.

9Finally, the court must determine what the appropriate remedy is given the triggering events and the circumstances of the case. “[I]t is a well-established principle that in a family law case, pleadings should be struck only in exceptional circumstances, and where no other remedy would suffice” (Kovachis v. Kovachis, 2013 ONCA 663 at para 2).

Factual Background

Overview

10The relevant factual background is extensive. The family litigation between the parties started with C.A.’s application in March 2010. It continued when K.G. issued his motion to change.

11K.G.’s non-compliance with court orders and the Family Law Rules is a long standing pattern of behaviour. Even when he consents to orders, he frequently fails to comply. If he does comply, it is when he decides to do so.

12This is not a case where there is no disclosure. In dribs and drabs, K.G. has produced disclosure but it is not complete. After nine years of litigation, K.G.’s true financial circumstances remain a mystery. This can no longer be tolerated.

During the Marriage

13During the marriage, C.A. was primarily responsible for the children’s care and well-being. K.G. ran a business called the Helicopter Group.

14C.A. was involved in her husband’s businesses and as a result she had enough knowledge of his finances to prove her claims.

15The Helicopter Group was a very successful direct mail business that specialized in sending personalized mail and advertising to households on behalf of customers that included major banks, large companies such as Nike, local companies such as car dealerships, charities, etc. The Helicopter Group reported revenues in the range of $4,000,000 to $5,000,000 a year. As further detailed below, it also had significant unreported income.

16As the Helicopter Group’s success grew, K.G. became interested in the nightclub scene. He ultimately invested significant amounts of money in nightclubs such as the Roosevelt Room Supper Club. In addition to the income that K.G. reported on his tax returns, he also earned significant amounts of unreported cash income from the Roosevelt Room and his other club-related business interests. C.A. frequently saw and counted thousands of dollars in cash that K.G. stored in the filing cabinet in his bedroom closet. He also kept tens of thousands of dollars in cash in the parties' safety deposit box.

17During the marriage, the family enjoyed an expensive lifestyle. They lived in a large home, took numerous vacations each year and bought many luxury items. K.G. spent large amounts of money attending night clubs and staying in hotels after late nights out.

18The family's significant expenses were paid for using the salaries that K.G. and C.A. each received from the Helicopter Group. Some expenses were paid by the Helicopter Group directly, and some were paid using the unreported cash income that K.G. received from the Helicopter Group and his various nightclub businesses.

19In 2009, during the last full year of their marriage before separation, the family’s living expenses exceeded $1million.

20In addition to funding the family's expenses, K.G. used the Helicopter Group to support his parents and his younger brother D.G..

21The Helicopter Group paid K.G.’s father a salary of about $110,000 a year to be the general manager for the Helicopter Group. While K.G.’s father came into the office to help out from time-to-time, he was really semi-retired and was not working full-time. The Helicopter Group paid K.G.’s mother a salary of about $40,000 a year for a production position but she did not do any work for the company. The Helicopter Group paid K.G.’s younger brother, D.G., a salary of about $85,000. He actually worked for the company.

22The Helicopter Group also paid all of the expenses associated with the various luxury vehicles that were driven by K.G.’s father and brother.

23K.G. and D.G. purchased a house in Markham, Ontario for $395,000, and their parents lived there. Money was taken from the Helicopter Group to pay the mortgage and the other property expenses. The Helicopter Group also spent about $45,000 to renovate the property.

24In early 2010, C.A. discovered that K.G. was living two separate lives; one with her and the children and another with H.W. and her daughter.

25In February 2010, K.G. took money from the Helicopter Group and used it to buy a home that was registered solely in his name. While he told C.A. that he bought the home for an investment, C.A. learned that he was planning to have H.W. and her child live there. The parties separated later that month. K.G. married H.W. after he and C.A were divorced.

After Separation

26K.G. was represented by senior counsel during the initial application. As the application proceeded, K.G. refused to provide disclosure, comply with court orders and cooperate. Examples are set out below:

(a) K.G. breached multiple disclosure orders that were made by Justice McGee in the early stages of the proceeding in 2010.

(b) K.G. breached a written agreement that the parties signed in December 2010 to settle C.A.'s motion for disclosure and interim support, and produce his expert reports by March 2011.

(c) When K.G. finally produced his expert reports in June 2011, 3 months after the court ordered deadline, he refused to provide the disclosure that C.A.'s business valuator needed to review the reports, and only agreed to do so on the morning of the motion that C.A. brought to compel him to produce the necessary information.

(d) Instead of providing C.A.'s valuator with copies of the information that she required, K.G. forced C.A. to pay her valuator to attend at K.G.'s office to review the documents that she had requested.

(e) In October 2012, K.G. stopped paying the full amount of the court ordered support that he owed C.A.. By September 2013, K.G. was only paying $3,000 of the $14,000 a month that he was ordered to pay. In 2013 he owed support arrears of about $48,000.

(f) K.G. started claiming that he was on the brink of personal bankruptcy, that the Helicopter Group was on the verge of insolvency, and that the Helicopter Group's bank was going to require him to reduce his income to about $100,000 a year. However, he refused to provide the necessary disclosure to substantiate these claims.

27In March 2013, C.A. produced an income and valuation report from Ms. Alterman. This expert concluded that K.G. was using the Helicopter Group as his personal "piggy bank", and was taking money out of the company in a number of "creative" ways, including doctoring cheques, bank statements, and credit card statements to make them look like the expenses were for business purposes when, in fact, they were for personal expenses. The expert concluded that K.G.’s income for support purposes was $804,000 in 2008, $1,056,000 in 2009 and $950,000 in 2010.

28In September 2013, K.G. changed counsel. This was the first of many such changes.

29In November 2013, C.A. brought a motion before Justice Kiteley for disclosure and various other relief. On December 31, 2013, Justice Kiteley ordered K.G. to produce the disclosure that C.A. had requested. In her reasons, Justice Kiteley states that there is “strong evidence that [K.G.] has altered credit card statements to conceal the true extent of his income”. The balance of C.A.’s motion was adjourned to March 24, 2014.

30On March 24, 2014, Justice D.A. Wilson found that K.G. was in breach of his court ordered disclosure obligations and his court ordered obligation to maintain C.A. as a beneficiary of his health insurance. Justice Wilson ordered K.G. to produce various disclosure and reinstate C.A.'s health insurance. The balance of the issues in the motion were adjourned to a date to be set. Justice Wilson arranged for the parties to attend a Settlement Conference before Justice Frank.

The Frank Order

31In April 2014, the parties attended before Justice Frank, entered into a final settlement and the Frank order was issued. The relevant parts of the Frank order are reviewed below.

32The Frank order provides that C.A. shall have sole custody of the children with access to K.G..

33K.G. shall pay $2,900 a month in child support and $4,600 a month in spousal support. He shall also pay C.A. a lump sum of $150,000 for spousal support before June 30, 2014.

34Support is based on an income of $240,000 for K.G. and $25,000 for C.A.. Paragraph 17 of the order states that while the parties’ income “has been a matter of significant dispute” they agreed on the above incomes for the purpose of setting support.

35Paragraph 18 of the order also states that the incomes used to set support “are strictly without prejudice” to their positions on a child and/ or spousal support review that is provided in para. 33 of the order. Paragraph 18 states:

The income levels referred to in paragraph 17 are strictly without prejudice to [C.A.] and [K.G.'s] positions for the purposes of the child and/or spousal support review referred to in paragraph 33. To be clear, while it is K.G.'s position that his current income for support purposes is actually significantly less than $240,000 a year, while it is C.A.'s position that K.G.'s income for support purposes is actually significantly higher than $240,000 a year, and while C.A. and K.G. do not agree about the level of income, if any, that C.A. is capable of earning, they have agreed to base the support calculations on the income levels referred to in paragraph 17 in order to resolve this matter.

36The Frank order also required K.G. to pay C.A. $105,000 in support arrears at a rate of $2,500 a month.

37Paragraph 20 of the Frank order states that K.G.'s support payments “are fixed and shall not be varied under any circumstances prior to March 31, 2017”:

20 The child and spousal support arrangements set out in paragraph 19 of this Order are fixed and shall not be varied under any circumstances prior to March 31, 2017. C.A and K.G. are fully aware of the Child Support Guidelines, and that they provide certain formulas for calculating a spouse's child support obligations based on their respective incomes as calculated in accordance with the Guidelines. However, they have specifically agreed to depart from the Guidelines, and they agree that the child and spousal support arrangements provided for by in this Order, viewed collectively, will meet the objectives of the Guidelines from April 1, 2014 to March 31, 2017.

38Paragraphs 33 to 37 deal with a “Review of Child and Spousal Support”. Either party may request a review after April 1, 2017.

39The Frank order states that the support arrears and the $150,000 lump sum for spousal support “are not subject to review” and the lump sum shall not be considered in the review. A review of support shall only address “prospective child and/or spousal support” from April 1, 2017 onwards.

40The Frank order requires K.G. to continue paying the child and spousal support under the Frank order “until the child and/or spousal support arrangements” set out in the Frank order are “adjusted by a written agreement” between the parties “or a court order”.

41C.A. explains that her litigation with K.G. was “incredibly difficult”. As a result, the Frank order included the above support provisions to provide her with protection in the future; specifically that support was fixed and not variable under any circumstances until April 1, 2017 and he was required to continue paying the court ordered support unless varied by agreement or court order.

42The Frank order also requires K.G. to maintain C.A. as the irrevocable beneficiary of $400,000 of life insurance to secure his support obligations.

43Finally, K.G. was ordered to “immediately rollover from his RRSP to C.A.’s RRSP $40,000 of cash. Paras. 50-51 state:

50. K.G. shall immediately rollover from his RRSP to C.A.'s RRSP $40,000 of cash RRSPs pursuant to s. 146(16) of the Income Tax Act in partial settlement of the Equalization Payment he owes her. K.G. shall complete Form T2220 and deliver it immediately to C.A. to effect the rollover.

51. K.G. confirms that these RRSPs are not locked in and are available now for C.A. to transfer to other RRSP assets or collapse. K.G. also confirms that C.A. is not liable for any commissions or other charges on the transfer or collapse of these RRSPs except her own incorne tax.

K.G.’s Non-Compliance with the Frank Order

44K.G. failed to comply with multiple provisions of the Frank order, including:

(i) He refused to pay the required monthly child and spousal support.

(ii) He only transferred $29,855.79 of the $40,000 in RRSPs that he had been ordered to rollover to C.A. and refused to transfer the remaining $10,144.21 to her.

(iii) Although K.G. told C.A. that he had named her as the beneficiary of $400,000 of life insurance, he refused to provide proof that he had done so, and he refused to designate C.A. as the irrevocable beneficiary as required by the Frank order.

45By March 2016, K.G.'s support arrears under the Frank order had increased to more than $80,000. The Family Responsibility Office started to pursue more aggressive enforcement actions against him. K.G. retained counsel and brought a motion for a refraining order to stop the Family Responsibility Office from suspending his driver’s licence. He swore a financial statement claiming that he was only earning $65,000 a year and yet listed expenses of $100,437 a year.

46On April 14, 2016, Justice Myers dismissed K.G.'s motion for a refraining order in its entirety, and found that K.G. had not even established a prima facie case that there had been a material change in circumstances. Justice Myers also noted that K.G.'s "own expenses show more discretionary spending than one would expect where a spouse is in arrears."

47On May 26, 2016, C.A.'s lawyer received a letter from a new lawyer, Karanpaul Randhawa, who advised that he had been retained by K.G.. Although C.A.'s lawyer advised Mr. Randhawa that K.G. was in breach of the life insurance, RRSP, and support provisions of the Frank order, K.G. did not bring himself into compliance.

48Furthermore, when C.A.'s lawyer told Mr. Randhawa that C.A. would be bringing a motion for contempt if K.G. did not comply with his life insurance obligations, K.G. threatened that "[i]f your client seeks to bring a contempt motion or a motion to comply and further seeks costs and/or other remedies available to your [client], [K.G.] will counter with his own contempt motion [with respect to the children] and seek same.".

49In June 2016, C.A. was paid $98,918.97 in support arrears that the Family Responsibility Office was finally able to collect from K.G. from the proceeds of sale of the property located in Markham, Ontario (the house that K.G and his brother purchased together). These funds satisfied the balance of the support arrears that K.G. owed C.A. at that time. After C.A. received these funds from the Family Responsibility Office, K.G. immediately fell behind on his support payments and arrears started to accumulate again.

C.A. brings a Contempt Motion

50In September 2016, C.A. served K.G. with a contempt motion for failure to comply with the Frank order. K.G. had failed to maintain the $400,000 life insurance policy to secure his support obligations and had failed to rollover the $28,000 in RRSPs. While some monies were rolled over, he still owed $10,144.21. As well support arrears were accumulating again.

51Shortly after K.G. was served with the contempt motion, C.A.'s lawyer was contacted by Erika Kalichman, yet another lawyer retained to act for K.G.. The contempt motion was adjourned while Ms. Kalichman familiarized herself with the matter. The contempt motion was not heard because K.G. finally rolled over the $10,144.21 in RRSPs that he was ordered to roll over in 2014. The outstanding life insurance continued to be pursued.

52On September 22, 2016, Ms. Kalichman advised C.A.'s lawyer that K.G.'s $400,000 life insurance policy no longer existed. Counsel provided confirmation that K.G. had designated C.A. and the children as the irrevocable beneficiary of $60,000 of life insurance through his employment. K.G.’s counsel said that she was going to bring a contempt motion against C.A. for not facilitating his access with the children.

53Upon learning that K.G. had cancelled his $400,000 life insurance policy, C.A.'s lawyer wrote to Ms. Kalichman to request further information, and to find out if K.G. could obtain additional insurance coverage through his employer. No information was provided.

K.G. Brings a Motion to Change the Frank order

54On January 10, 2017, K.G. issued a motion to change the Frank order. In his motion he seeks the following relief:

(i) Termination of spousal support retroactive to June 30, 2016;

(ii) An order that he pay child support of $892 a month based on an income of $60,000;

(iii) An order that the children primarily reside with him and that C.A.’s access be supervised and if allowed his child support order be adjusted accordingly;

(iv) An order that his arrears of child and spousal support be set at zero

55This motion to change is a breach of the Frank order. It was issued on January 10, 2017 and the Frank order did not allow a review until April 1, 2017. Further, the Frank order does not allow a retroactive review of support (prior to April 1, 2017) and the arrears of support fixed in the Frank order are not reviewable.

56In his motion to change, K.G. stated that the Helicopter Group had made a consumer proposal on March 23, 2016, and that he "was forced to sell the assets, security of the company, and [his] shares, on June 1, 2016 for $1.00, after it went into receivership." He also stated that the "TI Group Inc., bought my business and paid off my secured creditors", and that he accepted a full-time management position with TI Group, effective June 1, 2016. K.G. did not provide any supporting documentation about the consumer proposal and sale beyond a two page Statement of Affairs dated April 21, 2016 that showed the Helicopter Group owed unsecured creditors $978,397.41, secured creditors $448,004, and preferred creditors $50,484.28 (for a total of $1,476,885.59).

57C.A. subsequently learned that the Helicopter Group's $448,004 secured creditor was actually K.G.'s father. In other words, more than 30% of the company's debt (and all of its secured debt) was owed to K.G.'s father. C.A. says that this makes absolutely no sense because K.G. always supported his father and his father never had a lot of money beyond what K.G. provided to him. The inference is that K.G. is the one who received this money. It is not known what happened to this money.

The Conferences before a DRO, Justice Gilmore and Justice Wilson

58On March 1, 2017, C.A. attended the Case Conference that K.G. had scheduled before a DRO. K.G. did not attend and did not provide any of the disclosure that C.A. had requested prior to the Case Conference. As a result, the DRO adjourned the matter to a judicial Case Conference on April 10, 2017.

59On April 10, 2017, the parties attended a further Case Conference before Justice Gilmore and consented to an order that required K.G. to provide various disclosure within 45 days, including copies of the statements for all accounts and credit facilities held in K.G.'s name alone or jointly with another person, or held in trust on his behalf, or over which he has had signing authority since April 2014. Justice Gilmore also ordered K.G. to provide written proof from his employer about the options available for him to increase the life insurance coverage that he receives through his employment within five business days. K.G. did not comply with Justice Gilmore's Order.

60On July 24, 2017, the parties attended a Settlement Conference before Justice J. Wilson and consented to an order that required K.G. to provide various additional disclosure, including an affidavit explaining how he pays for his housing, vehicle, and travel expenses. K.G. did not provide the disclosure that Justice Wilson ordered.

61On September 18, 2017, C.A.'s lawyer sent K.G.'s lawyer a list of the outstanding disclosure, and noted as follows:

My client would like to resolve this matter. The difficulty we are having, however, is that we have not been provided with any explanation or supporting documentation showing how your client can afford to live in a million dollar home, drive a Mercedes, and travel regularly (e.g. to Jamaica, Mexico, Florida, and Montreal) when his disclosed income is only $60,000 a year, and when he has not disclosed any material assets on his Financial Statement. This difficulty is exacerbated by the fact that we have not received the disclosure that Justice Gilmore and Justice Wilson ordered your client to provide.

Please have your client provide the disclosure that he has been ordered to provide, and explain to us how he is funding his lifestyle expenses based on his disclosed income and assets.

Please also have your client obtain proof that he has increased his life insurance to the maximum amount that is available to him through his employment, which your June 20, 2017 letter indicated was $220,000.

62In response to this letter, and as required by Justice J. Wilson's order, K.G. swore an affidavit purporting to explain how he was paying for his housing, vehicle, and travel expenses. In his affidavit, K.G. claimed that:

(i) His wife, H.W., paid for all of the family's housing, vehicle, and travel expenses.

(ii) The account statements that he had produced did not show any deposits from his employer because "I sign the entire amount [of the 50% of my paycheck that is not garnished by Family Responsibility Office] over to my spouse to assist with [various household expenses]."

(iii) "My spouse is a Registered Nurse as well as a small home-based business owner, and as such, she with the financial assistance of our respective families, we are able to manage our monthly expenses."

63C.A. later obtained an affidavit from H.W. who disputes the truth of K.G.’s evidence, as detailed below.

64On October 10, 2017, the parties attended a further Settlement Conference before Justice J. Wilson. At the Settlement Conference, K.G. withdrew his claim for custody of the children. C.A. states that this is presumably because the therapist working with the family, concluded that this was a case of "realistic estrangement". The children did not have a relationship with K.G. because of their own independent experiences with him. This was not a case of parental alienation caused by C.A. as alleged by K.G..

65K.G. also withdrew his claim to vary child and spousal support prior to April 1, 2017 (i.e. during the fixed and non-variable period set out in the Frank order).

K.G.’s Summary Judgment Motion

66In late January 2018, K.G. served C.A. with a motion for summary judgment seeking to reduce his support or, in the alternative, for an interim variation of the Frank order. The vehicle for seeking this change was his motion to change, not a summary judgment motion. K.G. ought to have been making full disclosure and taking steps to schedule a hearing of his motion to change. In any event, the parties scheduled the summary judgment motion for May 15, 2018.

67In support of his motion, K.G. swore an affidavit claiming that he was only earning $60,000 a year. He also continued to claim that C.A. was responsible for alienating the children from him even though the therapist had concluded that this was a case of "realistic estrangement".

68K.G. swore a financial statement claiming that he was earning $59,799.96 a year, that he had no material assets, that his net worth was negative $123,535.30, and that his wife, H.W., was earning $69,680 a year as a registered practical nurse.

69After C.A. served a comprehensive responding affidavit, K.G. swore a reply affidavit claiming that his finances "are not complex", and that he only earned $64,600 in 2017. He alleged that C.A. had been delaying the proceeding. He also repeated his previous allegation that she had alienated the children from him even though this was untrue.

70There is no evidence that C.A. was responsible for any delay. The delay in moving K.G.’s motion to change forward was caused by his refusal to comply with court orders.

Orders of Justice Backhouse and Justice Stevenson

71After K.G. served his summary judgment motion to reduce his support payments, C.A. brought a motion before Justice Backhouse to compel K.G. to attend for cross-examination, and to prohibit him from proceeding with his motion to change until he had complied with his life insurance obligations under the Frank order.

72On May 15, 2018, Justice Backhouse made a specific finding that the life insurance provisions of Frank order have "never been complied with", and ordered that K.G.'s motion would be stayed if he did not immediately increase his insurance coverage from $60,000 to at least $220,000. Justice Backhouse also ordered K.G. to produce various disclosure, including bank and credit card statements for his wife's accounts, and to pay C.A. $5,000 in costs.

73K.G. did not comply with Justice Backhouse's order. As a result, on June 22, 2018, C.A. brought a motion to confirm that K.G.’s motion to change had been stayed or should be struck. The parties were unable to agree on a timetable for C.A.'s motion. They argued the timetable issue before Justice Stevenson on July 10, 2018. A timetable was ordered and K.G. was ordered to pay C.A. $750 in costs.

74K.G. served an affidavit in response to C.A.'s motion claiming that it was not his fault that he was unable able to comply with Justice Backhouse's life insurance order, disclosure order, $5,000 costs order, and Justice Stevenson's $750 costs order. He alleged that "[t]he pressure and frustration surrounding this litigation, has resulted in my wife and I separating", and claimed that the statements that Justice Backhouse ordered him to produce from his wife H.W. were irrelevant.

Justice Del Frate's Order

75On August 28, 2018, the parties attended before Justice Del Frate and on consent an order was issued (the “Del Frate order”). At this point K.G. had new counsel, Oren Weinberg. The parties agreed to have a four way meeting to try and resolve the matter. K.G. also withdrew his summary judgment motion to reduce his support payments that he had served in January 2018.

76Paragraph 1 of the Del Frate order requires K.G. to do the following:

(i) K.G. shall pay $20,000 towards the fixed and non-variable support arrears;

(ii) K.G. shall pay $5,750 in costs that he owed C.A.;

(iii) K.G. shall “immediately” take steps to ascertain if he could obtain life insurance above $60,000 and provide “full and complete information” to C.A.;

(iv) K.G. shall attend a four way meeting with a mediator before October 31, 2018.

(v) At least 10 days before this meeting, K.G. shall provide C.A. with an updated financial statement and copies of all of his account and credit card statements since May 1, 2018;

(vi) K.G. shall bring all of his passports to the meeting.

77Paragraph 2 of the Del Frate order states that if K.G. breaches any part of para. 1, C.A. is entitled to return her motion to strike to the court. As explained below, K.G. did not fully comply with para. 1 of the Del Frate order. For this reason, C.A.’s motion was returned before this court.

78After the Del Frate order, K.G. paid $20,000 towards his support arrears and $5,750 in costs that he owed C.A.. He also produced a financial statement claiming that he was only earning $59,999.88 a year, that he had no material assets, and that his net worth was negative $227,202.08.

79K.G. also produced various bank and credit card statements. It is clear from these statements that K.G. has undisclosed accounts that he did not list on his financial statement. The statements produced reveal the following:

(i) The May 2018 statement for K.G.'s RBC account shows deposits totalling $10,985.43 from a TFSA and RSP, but the statements for the TFSA and the RSP have not been provided.

(ii) The July 2018 statement for K.G.'s Mastercard shows that he made payments on this card totalling $5,300, but no corresponding withdrawals appear on any of the other account statements that he provided for July 2018.

(iii) The statements that K.G. produced pursuant to the Del Frate order do not show any payments for his car, housing, and cell phone. There is no documentary proof to show how these typical expenses are paid.

(iv) The statements that K.G. produced pursuant to the Del Frate order do not show any expenses for the trips to New Orleans and the Bahamas that H.W. states that he took during the summer of 2018.

80The account statements that K.G. provided show that his spending exceeds what is affordable based on his alleged salary of $65,000 a year and his claim that he pays 50% of his income to the Family Responsibility Office. For example, K.G.'s June 2018 RBC Visa statement shows that between May 21, 2018 and June 15, 2018, he spent $1,139 at various restaurants and the LCBO, and another $1,101.75 for landscaping.

81K.G. did not produce his passport as ordered. He forgot to bring it to the meeting. He brought his passport to the hearing of this motion and it was marked as an exhibit. The passport reveals that since the issuance of the Frank order, K.G. has travelled outside Canada on several occasions: Jamaica - March 2017 and October 19, 2018; Punta Cana in 2017 (multiple entry stamps for 2017) and March 2018; Mexico – 2016 and 2019; United States multiple entry stamps in 2014, 2015, 2017, 2018 and 2019; Bahamas - August 17, 2018. This level of travel reinforces the conclusion that K.G.’s spending exceeds what is affordable on his alleged salary. There is no record to show how he paid for this travel and related travel expenses such as food and accomodations.

Affidavit of H.W.

82H.W. married K.G. after he and C.A. were divorced. K.G. and H.W. eventually separated and she issued an application in Family Court. During this application, H.W. served K.G. with a detailed affidavit (the “H.W. affidavit”).

83On November 29, 2018, H.W.’s counsel sent C.A.’s counsel a copy of the H.W. affidavit. C.A. filed the H.W. affidavit to support her motion.

84K.G. argues that the H.W. affidavit is inadmissible because it was not sworn for this motion and he says it is unclear if H.W. consented to the use of her affidavit on this motion. K.G. has chosen not to respond to the content of the H.W. affidavit that is reviewed below.

85The H.W. affidavit contains evidence that is clearly relevant to the dispute between K.G. and C.A.. It was provided to C.A.’s counsel for use in this dispute. The deemed undertaking rule does not prevent C.A. from relying on the H.W. affidavit. Rule 20(24) of the Family Law Rules states that the deemed undertaking rule only applies to evidence that is obtained under rule 13 (financial disclosure), rule 19 (document disclosure), and rule 20 (questioning a witness and disclosure). It follows that the deemed undertaking does not apply to the H.W. affidavit because C.A. did not obtain it pursuant to any of these rules. Furthermore, even if the deemed undertaking rule applied to all or part of the H.W. affidavit, rule 20(25) of the Family Law Rules provides that the deemed undertaking rule does not apply if the person who gave the evidence consents. H.W. consented to her affidavit being used in this proceeding when she voluntarily provided it to C.A.'s lawyer on November 29, 2018.

86It is important to note that two court orders have recognized the importance of H.W.’s evidence. K.G. consented to the order of Justice Wilson on October 10, 2017 requiring him to produce H.W.’s bank statements and other financial information. Justice Backhouse ordered K.G. to produce financial information from H.W. and Justice Del Frate set a deadline for K.G. to comply with the Backhouse order. K.G. did not comply.

87The H.W. affidavit as reviewed below demonstrates that K.G. has lied about his financial circumstances and other matters in this proceeding.

88H.W.'s affidavit shows that:

(i) Since about 2013, K.G. was secretly paying H.W. a salary from the Helicopter Group of approximately $70,000/year even though she did not work for the company. This started before K.G. and C.A. consented to the Frank order.

(ii) K.G. continued paying H.W. a salary of approximately $70,000 a year from the Helicopter Group, even after it was allegedly taken over by the TI Group in 2016. H.W. never worked for the TI Group.

(iii) In addition to the salary that K.G. paid H.W. from the Helicopter Group, he "would give [her] around $2,000 cash monthly."

(iv) During their relationship, K.G. and H.W. "travelled quite often, ate at expensive, fine-dining restaurants, went on shopping sprees, attended nightclubs with bottle service and drove expensive cars."

(v) K.G. "made expensive purchases for [H.W.] throughout [their] marriage especially when [they] fought. He bought [her] 6 pairs of Christian Loubouin shoes, and accessories from Louis Vuitton, Gucci, Michael Kors and Chrome Hearts, included purses. He bought [her] 2 high-end Tiffany rings - one tourmaline with diamonds and one yellow diamond ring."

(vi) Contrary to K.G.'s evidence in this proceeding that H.W. was working as a nurse and that her income as a nurse was helping to fund their family's expenses, H.W. did not work during her relationship with K.G., as a nurse or otherwise.

(vii) Although title to K.G. and H.W.'s matrimonial home was in her name and K.G.'s father's name, the money to purchase the home came from K.G. and not his father.

(viii) In November 2013, (i.e. before K.G. and C.A. consented to the Frank order), K.G. and H.W. purchased a swingers' club in Mississauga called the "X Club". Although H.W. was the legal owner of the company that operated the X Club, K.G. was responsible for managing the club"including the X Club's finances and liquor licencing", and he "did all of the banking."

(ix) K.G. and H.W. took numerous vacations to resorts in Mexico and other places, and K.G. "would pressure [H.W.] into frequent travels to these resorts because [they] had to promote the X Club." K.G. also took vacations by himself to New Orleans and the Bahamas during the summer of 2018.

Current Status of K.G.’s Non-Compliance

89K.G. remains in breach of the Frank order and subsequent court orders that were issued.

90K.G. has not paid the child and spousal support required in the Frank order. As of March 31, 2019, he owes support arrears of $162,651. This consists of fixed and non-variable arrears that total $38,792 and $123,859 of arrears that have accumulated since April 1, 2017.

91K.G. does not have any life insurance in place to secure his child and spousal support obligations. This is a breach of the Frank order and the Backhouse order. K.G. was recently approved for $150,000 of life insurance at a cost of only $1,500 a year. He has refused to put even this reduced level of life insurance in place (even though C.A. agreed that obtaining and paying for the $150,000 of insurance and making her the owner of the policy so that she would not need to rely on him to obtain information about its status, would constitute compliance with the Backhouse order).

92While K.G. eventually provided court ordered account statements, the statements produced raise numerous other questions and show that his disclosure is not complete. For example, none of the account statements reveal expenditures that would be required to travel and stay at the various places recorded on his passport.

93As well, K.G. has not provided the necessary court ordered disclosure to prove the various items on his financial statement.

K.G.’s evidence is unreliable.

94The H.W. affidavit shows that K.G. is not telling the truth. Even if I were to exclude this affidavit, K.G.’s evidence on its own shows that he is an unreliable witness.

95K.G.’s evidence about his income is inconsistent. In his financial statement dated January 10, 2017, K.G. swears that his gross income from all sources in 2016 was $220,823. This is very close to the $240,000 that he agreed to use as his income for the purpose of support in the Frank order. In his change information form dated January 10, 2017, he states that he earned significantly less than $240,000 when the Frank order was agreed to. In his affidavit, he states that the Helicopter Group was insolvent by March 2016 and effective June 1, 2016, he was employed by TI Group and earned $60,000 with a $450/month car allowance.

96In his financial statement sworn on November 13, 2017, K.G. swears that his income in 2016 was $77,283 and yet he swore on January 10, 2017 that his 2016 income was $220,823.

97In his financial statements he lists various loans that he has never documented. In the November 13, 2017 financial statement, he lists a $35,000 loan from his father. Curiously this loan is not mentioned in K.G.’s July 19, 2018 affidavit where he sets out his “substantial debt”.

98In a financial statement sworn on October 24, 2018, the loan from his father reappears, as well as several other loans from family members and a person named Steven Feng. The loans total $218,250. There is no documentation to support the loans except the $20,000 loan from Mr. Feng. K.G. produced a promissory note to Mr. Feng signed only by K.G. with no other documentation to prove this loan. None of the loan amounts appear on any of the account statements that have been produced. The circumstances leading to the loans and what K.G. did with the money have not been revealed.

99The Del Frate order requires K.G. to provide supporting documentation for all entries on his financial statement. He has not done so.

100The bank statements that have been produced show that K.G. has not made full disclosure. For example, the RBC May 2018 statement records a $2,605.77 deposit to a TFSA and a $8,379.66 deposit to a RSP. As noted, the TFSA and RSP account statements have not been produced.

101K.G.’s Walmart credit card shows various payments that raise questions. Payments are made on this credit card but his bank accounts do not reveal any corresponding withdrawals: i.e. a $300 payment May 22, 2018; $5,000 on July 5 2018 and $300 payment on June 28 2018. It is not known where the money is coming from. This shows that K.G. has sources of money that are not disclosed.

102As noted above, K.G. paid a landscaping company $1,101.75 on June 12, 2018 and incurred numerous entertaining and restaurant expenses and yet claims he earns $60,000.

103K.G.’s passport reveals extensive travel outside Canada. Expenses that would be expected for such travel do not appear on any of his account statements.

104In K.G.’s affidavit sworn on March 1, 2019, he states that he has done everything to obey court orders. This is simply not true.

105In his March 1, 2019 affidavit, he reveals that the TI group terminated his employment on January 31, 2019. The employer’s letter states that the termination “is based on your wilful misconduct related to your unauthorized use of company assets and potential criminal charges that have been brought to our attention.” K.G. has not offered any evidence to explain his conduct or what he is doing now to earn an income.

106When K.G. was asked to explain how he could afford to pay for his living expenses, he said that money came from H.W. who earns $69,650 as a nurse. While they were living together, he says that she contributed $4,600/month ($55,200) to the household expenses. He did not explain how she could pay taxes and have $55,200 left to pay for household expenses. H.W. of course denies all of this.

107Despite numerous court orders and letters of request from C.A.’s counsel, K.G. has not provided a reliable explanation to show how he pays for his daily activities and household expenses.

Analysis

108Based on my review of the evidence, I turn to the decision making framework.

There are triggering events

109There are three triggering events. As detailed above, K.G. has breached the Frank order. This is clearly established.

110First K.G. owes $162,651 in support arrears. It is important to emphasize that $38,792 of the arrears are fixed and non-variable. As well, with the benefit of senior counsel, K.G. consented to the term in the Frank order that requires him to continue paying the support pending any review he might seek. He agreed to these terms in the Frank order while claiming that he earned significantly less and that his company was in trouble. Without the court ordered support, C.A. cannot meet her expenses and those of the children and her efforts to find employment have not succeeded.

111Second, K.G. has not obtained life insurance to secure his support obligations.

112Third, K.G. has not complied with the various disclosure orders that have been made throughout the entire litigation process. During the motion to change process, K.G. has produced some disclosure but never before the court ordered deadline. The disclosure that he has provided raises many more unanswered questions and shows that he has not complied with his fundamental disclosure obligation.

Is it appropriate to strike the motion to change? Is there an alternative remedy?

113Relief under rule 1(8) should only be allowed in exceptional circumstances. Striking a pleading is a remedy of last resort because it would deny K.G. the opportunity to be heard on his motion. There are several appellate authorities that guide my decision.

114Providing full financial disclosure is the most basic obligation in family law. In Burke v. Poitras, 2018 ONCA 1025 at para 11-12 the court addressed this obligation:

11 It is well-established that the most basic obligation in family law is the parties' duty to disclose financial information and that this requirement is immediate, automatic, and ongoing. As a result, it should not require a court order to enforce: see Roberts v. Roberts, 2015 ONCA 450, 65 R.F.L. (7th) 6, at paras. 11-14. As this court warned in Manchanda v. Thethi, 2016 ONCA 909, 84 R.F.L. (7th) 374, at para. 13: "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."

12 This is because, as this court recognized in Roberts, at para. 12, breach of the disclosure obligation causes real harm:

Failure to abide by this fundamental principle impedes the progress of the action, causes delay and generally acts to the disadvantage of the opposite party. It also impacts the administration of justice. Unnecessary judicial time is spent and the final adjudication is stalled.

[Emphasis added.]

115As stated in Burke v. Poitras at para. 7, an order striking a pleading can be made at any time in the proceeding to promote the overarching purpose of the Family Law Rules:

7 The express purpose of the Family Law Rules is to ensure fairness, save time and expense, and give appropriate resources to the case (while allocating resources to other cases), in order to manage the case, control the process, ensure timelines are kept, and orders are enforced. As clearly stipulated in subrules 1(7.1), (8) and (8.1), an order, including an order to strike pleadings, can be made at any time in the process, including the settlement conference, to promote these overarching purposes. In this way, any order that promotes the overall objectives of the rules may be made at any time, including at a settlement conference.

116Finally, when considering the non-disclosure, my analysis takes into account the Mullin factors set out above.

117During the initial application, K.G. demonstrated a disregard for his disclosure obligation and court orders. This conduct continued after the Frank order was issued and exists today.

118A court order should not be necessary to enforce a party’s ongoing duty to disclose financial information. Sadly, in this case numerous court orders have been made against K.G. and yet serious disclosure problems remain. This is a situation where basic disclosure is still missing, such as documents to support the entries on K.G.’s financial statement.

119More than two years have passed since the motion to change was issued. There have been multiple court attendances and court orders made. The “real harm” referred to in Roberts has resulted in this case. K.G.’s non-compliance has added significant expense to the proceeding and has consumed substantial judicial time and resources. While some orders have resulted in disclosure, significant questions about K.G.’s financial circumstances remain. The evidence shows that K.G. lies about his financial circumstances. His conduct has directly hindered the ability to try and resolve his motion.

120Significant support arrears have accumulated. Understandably, C.A. is suspicious of K.G.’s claim that he cannot afford to comply with the court ordered support.

121From the outset of the litigation between the parties, K.G. has demonstrated a disregard for court orders. He has not made a serious effort to comply with court orders. He produces what he wants and ignores the court ordered deadlines.

122K.G. has been warned by the court and yet his conduct continues. In 2013, Justice Kiteley found “strong evidence” that K.G. had altered his credit cards to conceal income. The evidence on this motion shows that he continues to conceal the truth of his financial circumstances. As well, Justice Backhouse warned K.G. that his continued non-compliance with the Frank order would result in his motion to change being stayed.

123While K.G. says that he has made every effort to comply, this is not true. His disclosure to date has not provided any clarity. Instead, his disclosure has raised numerous substantive unanswered questions about his financial circumstances. There is no credible explanation offered for his non-compliance. There is no reason to believe that yet another court order will bring K.G. into compliance.

124K.G. argues that the court should let his motion to change proceed. One might look at the evidence in this case and say that the motion to change is bound to fail since K.G. consented to the Frank order, while arguing at that time that his company was failing. What has changed? Let the motion proceed and C.A. can argue that he has not proven his case.

125I conclude that it would be grossly unfair to C.A. to allow this motion to proceed. Further, it would be contrary to the primary objective of the Family Law Rules, specifically to deal with cases justly. C.A. has already endured far too many motions attempting to force K.G. to comply with court orders. There must be consequences when a party is in non-compliance with court orders and the Family Law Rules. Allowing his motion to proceed would reward K.G. for his behaviour that can no longer be tolerated.

126C.A. asks that the motion to change be struck. If not allowed, she seeks alternative relief: that the motion be struck if K.G. does not fully comply by a set deadline. Full compliance would require full payment of all child and spousal support owed under the Frank order, proof that he has secured the life insurance and completion of his disclosure obligations.

127The difficulty with the alternative relief is obvious. Such an order would once again cause further expense and court attendances that would likely be required to assess if K.G. has met his disclosure obligations. K.G. has had many chances to comply. As C.A. submits “enough is enough”. I agree.

128The circumstances of this case are exceptional and justify striking the motion to change pursuant to Family Law Rule 1(8)(c). There is no other remedy that would suffice.

Conclusion

129I make the following orders:

1. The respondent’s motion to change dated January 10, 2017 is struck.
2. If the parties cannot agree on the costs of this motion they shall exchange brief written submissions and file them with the court by May 30, 2019.

C. Horkins J.