Court File and Parties
COURT FILE NO.: FS-19-00099 DATE: 2020 01 06 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Romina Giavon, Applicant AND: Christopher Nagy, Respondent
BEFORE: Ricchetti J.
COUNSEL: M. Newton for the Applicant C. Nagy, self-represented
HEARD: December 20, 2019
Endorsement
The Motion
[1] This is a motion by the Applicant to strike the Respondent's pleadings for non-compliance with court orders.
The Background to the Proceedings
[2] Despite the fact this is a 2019 proceeding, this matter has been before this court on numerous occasions, much of it due to the Respondent's actions to delay and frustrate the Applicant's claim. [3] The Applicant and Respondent started to live together in 2006. [4] The Applicant was unemployed through most of the relationship and is now currently unemployed. [5] The Respondent is self-employed as a locksmith. His income from this business is unknown and central to the issues in this motion. [6] In 2008, the parties purchased a home at 16 Foster Crescent, Brampton ("Home"). The Home was registered in their names jointly. [7] The parties separated in September or October 2016 according to the Applicant and December 2012, according to the Respondent. [8] The parties continued to live under the same roof and, as is often the case, this resulted in escalating discord between the parties. The conflict between the parties became worse when, while living under the same roof, the Respondent remarried and has a child of that marriage. [9] There are two mortgages on the Home. There is a dispute as to the application of the second mortgage funds disbursed to the Respondent, a mortgage taken out after the separation, purportedly to pay off family debts. [10] In early 2019, the Respondent wanted the Applicant to leave the Home. The Applicant refused. The Applicant wanted the Home sold. The Respondent did not want the Home sold but indicated he wanted to buy out the Applicant's interest. However, there is no evidence that anything was done to further the Respondent's interest to do so. [11] The Applicant's counsel advised that unless the Respondent agreed to sell the Home, the Applicant would commence legal proceedings to sell the Home. [12] In response to the Applicant’s threat to commence litigation, on April 12, 2019, the Respondent commenced litigation (CV-19-1576) ("Civil Proceeding"). On April 15, 2019 the Respondent brought an ex parte motion seeking to refinance the Home without the consent or the signature of the Applicant. The court rejected the motion. [13] On April 16, 2019, the Applicant commenced this Application. Essentially, the three issues advanced by the Applicant are the division of the Home, an accounting of the use of the second mortgage funds and spousal support. [14] The Applicant brought a motion to stay the Civil Proceeding and to sell the Home. The matter came before the court on April 23, 2019 but was adjourned to April 30, 2019 to permit the Respondent to file materials. [15] At the return of the motion on April 30, 2019, the Respondent had not filed responding materials. By order dated April 30, 2019, the court ordered the sale of the Home setting out terms the parties were to comply with to facilitate the sale of the Home. The Respondent was ordered to pay costs of $5,000. [16] The Respondent remained resistant to the sale of the Home. The Respondent delayed signing the listing agreement as per the timetable in the April 30, 2019 court order. Even after the listing agreement was signed late, the Respondent continued to obstruct the sale of the Home. The Applicant had to seek further relief from the court. [17] The matter returned to court on June 6, 2019 to deal with the Respondent’s obstructive actions to impede the sale of the Home. Again, there appears to be no responding materials filed by the Respondent. By order dated June 6, 2019, the court again ordered the sale of the Home, added additional terms to ensure the Respondent did not further obstruct the sale, and ordered that the Respondent pay costs of $4,000 of the motion. [18] Despite the June 6, 2019 order, the Respondent continued to obstruct the sale of the Home. [19] On June 26, 2019, a case conference was held. Both parties were represented by counsel. The court made an order which included: i. the preservation of assets; ii. The Respondent was to produce an accounting by the Respondent of the use of second mortgage funds from the Home by July 31, 2019; iii. The disclosure, by August 31, 2019, of:
- all financial records;
- up-dated sworn financial statement;
- personal income tax returns from 2012 to 2018 (including schedules and attachments, and Notices of Assessments);
- all monthly and quarterly statements for all bank accounts, credit facilities; and
- all applications for credit; iv. Where the disclosure documents were produced by August 31, 2019 by a party, the party was to produce a sworn affidavit as to efforts made to obtain the documents, why they were not bring produced and to provide a written direction to the other party to permit them to obtain the documents directly; v. Either party could seek an order to obtain a Chartered Business Valuator or pension valuator; vi. Questioning; vii. A Settlement Conference was scheduled for September 30, 2019; and viii. The Applicant was granted leave to bring a contempt motion arising from the Respondent’s actions obstructing the sale of the Home. [20] On June 28, 2019, the Respondent filed his Answer. On the issue of spousal support, the Respondent denied that the Applicant was entitled to support as he had encouraged her to find employment during the relationship and she deliberately chose not to do so. The Respondent denied he had the financial ability to support the Applicant. The Respondent filed a Financial Statement showing an annual income of $42,000 and essentially no assets, other than the Home. [21] As a result of the Respondent's continued obstruction of the sale of the Home, the Applicant brought a motion for contempt returnable on July 12, 2019. The Applicant’s motion was dismissed. However, the court stated:
I do not find the Respondent's explanations to be particularly compelling or persuasive, and I have no real hesitation in finding that he acted improperly and likely with a view to frustrate the sale of the matrimonial home. However, I am not prepared to make a contempt finding against him at this time... Despite this, however, I have no hesitation in finding that the Respondent's conduct and behaviour frustrated the realtor's ability to reasonable and effectively show the home to prospective buyers. As a result, I find that it is appropriate for me to make a fairly prescriptive order to ensure that the parties are able to sell the home in a fair and reasonable manner.... The Applicant...is entitled to her costs on a partial indemnity scale in the fixed amount of $3,800 inclusive of taxes and disbursements.
[22] The Respondent did not pay the prior cost orders. [23] An agreement was entered into to sell the Home. The Applicant wanted the cost orders paid from the Respondent's share of the net proceeds of sale. The Respondent objected. The matter returned to court on August 27, 2019. The court confirmed the sale of the Home and ordered that the outstanding cost orders be paid from the Respondent's share of the net sale proceeds and further ordered costs to the Applicant of $1,500. [24] The Home sale was completed in August 2019. Monies remain in trust. [25] The matter came before the court again on September 26, 2019, by way of a Settlement Conference. An order was made which included the following: i. Anna Barrett, a CBV, was appointed to value the Respondent's income from October 2016 to the present. Ms. Barrett's fees were to be paid from the Respondent's share of the net sale proceeds of the Home; ii. "The Respondent shall have a final opportunity to comply with this Court's disclosure Order dated June 26, 2019 by providing the said disclosure by October 11, 2019.” (emphasis added); iii. Questioning was to take place on October 15, 2019; iv. Leave was granted to the Applicant to make a motion to strike the Respondent's pleadings on the financial issues, returnable on December 20, 2019; and v. The trial was scheduled for the May 2020 sittings. [26] The Respondent failed to deliver the disclosure ordered by the deadline set by the court. He delivered nothing! [27] As a result, on November 19, 2019, the Applicant brought this motion to strike the Respondent’s pleadings for non-compliance with the June 26, 2019 and September 26, 2019 disclosure orders (“Price J. Orders”). [28] On November 25, 2019, the Respondent's counsel was removed as solicitor of record and the Respondent now is self-represented. [29] As of December 15, 2019, the Respondent had not made ANY financial disclosure that had been ordered. However, on December 16, 2019, four days before this motion was to be heard, the Respondent filed two volumes of documents - essentially portions of two bank statements. What was filed is more fully dealt with below. There was no disclosure of the use the Respondent made of the second mortgage funds. The Respondent did not cooperate to permit Anna Barrett to review his business’ financial documentation so that she could provide an income valuation as ordered by the court.
The Position of the Parties
The Applicant’s Position
[30] The Applicant submits the Respondent has disregarded two court orders to disclose financial documents: he disregarded the first order of June 26, 2019, then he was given a “final opportunity” to disclose his financial documents by order of September 26, 2019, he failed to comply with the September 26, 2019 order, making no efforts at all to do so knowing that a motion to strike his pleadings was scheduled if he failed to make the ordered disclosure. Nevertheless, the Respondent continued to ignore the court orders, making only a partial disclosure of incomplete documents just days before the motion was to be heard. [31] The Applicant submits this is an exceptional case for which the Respondent's pleadings should be struck.
The Respondent's Position
[32] The Respondent seeks a plethora of relief in this motion. I will disregard the fact that he has not brought his own motion or cross-motion given that he is now self represented. [33] The Respondent has filed a very lengthy affidavit in response to this motion. There are numerous exhibits, although none of the financial disclosure ordered. In fact, the Respondent's affidavit does not deal with the non-compliance of the Price J. Orders. [34] At the motion, the Respondent points to the filed two volumes of financial documents he delivered on December 16, 2019.
The Responding Affidavit
[35] Let me deal with the Responding Affidavit more fully. [36] The Respondent asks that the Applicant's pleadings be struck. [37] The Respondent seeks to "remove this case" so that he can pursue a "Civil Lawsuit for $5.5 million dollars against the Applicant, Romina Giavon, her parents Maria Inmaculata Cassalinovo-Giavon and Luccian Giavon, and Kania Law Firm" for a variety of alleged wrongful actions by these parties. This is no answer to non-compliance with the Price J. Orders. [38] The Respondent alleges that the Applicant and her lawyer have committed "perjury, fabricating evidence, defamatory libel, lying in her Affidavits and not submit any evidence that prove of sustain her claims." This is no answer to non-compliance with the Price J. Orders. [39] The Respondent filed a complaint with the Law Society against the Applicant's counsel. This is no answer to non-compliance with the Price J. Orders. [40] The Respondent reported the Applicant to the Children's Aid Society regarding the Applicant's actions to sell the Home (despite the court orders directing the sale of the Home). This is no answer to the non-compliance with the Price J. Orders. [41] The Respondent filed a complaint against the Real Estate Council of Ontario against the agent involved in the sale of the Home. This is no answer to non-compliance with the Price J. Orders. [42] The Respondent seeks to revoke some of the court endorsements "due to the dishonesty and perjury of the Applicant and Mr. Newton [her counsel]." This is no answer to non-compliance with the Price J. Orders and there is no basis in law absent an appeal. [43] The Respondent alleges that the judge in the mortgage enforcement proceeding against him and the Applicant did not "look at all my materials" before making an order in this matter. This is no answer to non-compliance with the Price J. Orders. [44] The Respondent denies that the net sale proceeds of the Home should not be divided because, he alleges, the Applicant used it to make and distribute child pornography. This is no answer to non-compliance with the Price J. Orders. [45] The Respondent also describes some alleged pornography charges against the Applicant, although, the true nature of the charges and the current status of the charges is not clearly set out. This is no answer to non-compliance with the Price J. Orders. [46] The Respondent, when permitted by the court order to attend at the Home prior to the closing of the sale of the Home, took documents from the Applicant's bedroom. The Respondent includes in his affidavit a variety of documents to show allegedly disparaging aspects of the Applicant by describing some of her sexual communications with others. In or about July 2019, the Respondent reported to the police that the Applicant was breaching her bail. The Applicant was arrested on August 28, 2019 for breach of conditions but appears to have been released. Whether there are current outstanding charges for this breach is not known. This is no answer to non-compliance with the Price J. Orders. [47] In short, the Respondent, despite voluminous materials in the responding affidavit, he did not deal with the issue before the court - his deliberate failure to comply with the Price J. Orders to make the financial disclosure ordered. Except, that he states at para. 54 of his affidavit:
... If this was an actual Family Matter then all documents would be shown.
The Bank Statements produced on August 16, 2019
[48] Just prior to the return of this motion, the Respondent provided two volumes of documents, showing his chequing account bank statements and his business account bank statements. [49] This disclosure fails to comply with all the financial disclosure that was ordered in the Price J. Orders. Further, this disclosure is incomplete and, it would appear to this court, demonstrates a continuing attempt by the Respondent to hide his true financial circumstances or permit Anna Barrett to conduct a review and provide an opinion on the Respondent’s income. [50] In the chequing account bank statements produced, the Respondent only produced the front page of his bank's chequing statements, which page discloses the monthly balance but fails to show all deposits and withdrawals and other activity for the balance of the month. [51] As for the Respondent's business account bank statements produced, very few contain complete statements (i.e. all pages). In most cases, these bank statements did not include all the statement pages for the month. For example, in one month the bank balance went from $8,792.27 to $26,316.09 without any indication how that occurred. What pages business account bank statements produced raise a number of questions as to the Respondent's business income (assuming it all went through this account) such as:
- Interac payments;
- ATM withdrawals;
- food and other personal purchases;
- utility payments;
- payments to him or his wife (for example, see July and August 2018 cheques for $1,500 each and $1,000 in October 2018). [52] Simply put, the Respondent was very selective of the portions of the bank statements produced and, thereby, continues to hide his true financial circumstances. [53] In addition, this financial disclosure also continues to fail to produce the remainder of the financial disclosure ordered by Price J. Orders such as tax returns, statements, ledgers and so on.
The Analysis
[54] Despite the extensive affidavit and voluminous documents produced by the Respondent, he failed to address the issue at the centre of the motion – his failure to comply with the Price J. Orders for financial disclosure. [55] During the Respondent's submissions, when asked about the excerpted bank statements, the Respondent denied that the missing pages were relevant. When questioned further, he essentially said he would produce the remainder of the pages. [56] However, even if all the bank statements were provided, this would not result in compliance with the Price J. Orders. [57] The Respondent has not provided his 2012 to 2018 income tax returns and related documents as ordered. When asked about the missing tax returns, the Respondent said that he has not filed these returns but that his accountant has all the financial documents. The problem with this answer is that the Respondent says that his accountant has his business financial documents to prepare tax returns but, he offers no explanation why they have not been produced. The other problem is why did he/his counsel agree to produce these documents if they didn’t exist? [58] The Respondent has failed to cooperate with the retainer of Anna Barrett (the CBV) to opine on the Respondent's income. Without the Respondent’s complete financial documentation, Ms. Barrett cannot perform the role appointed by this court. [59] The Respondent has still not provided an accounting of the monies he received from the second mortgage. [60] The Respondent has not produced an up-to-date Financial Statement setting forth his income and all his assets [61] I conclude that the Respondent has and remains in deliberate breach of the Price J. Orders. [62] All of the circumstances of the proceeding must be considered when determining the exercise of this court's discretion whether to strike pleadings. Considering all the circumstances of this case and the Respondent's actions to date, I am also left to conclude that the Respondent has and will not make voluntary production of his financial records despite the current or future court orders: a) In response to the Applicant's counsel's request for compliance with the Price J. Orders, on November 7, 2019, the Respondent's counsel wrote to the Applicant's counsel that his client (the Respondent) was "not going to follow Justice Price's order." Further, the Respondent was not going to contact the Business Valuator, Anna Barret. It is clear that the Respondent was true to his word – he has done neither; b) While the Respondent acknowledges that his business financial records exist and are with his accountant, he has not produced them despite two court orders and knowing that this motion was scheduled 3 months earlier to give him an opportunity to do produce the financial documentation; c) The Respondent has a history of ignoring court orders, such as the orders for the sale of the Home; d) The financial disclosure of the Respondent is critical in this proceeding as the Respondent is self-employed and the primary remaining issues are spousal support and the Respondent’s use of the second mortgage funds. And he knows his financial records are necessary for a judicial determination of these issues; e) The Respondent objected to paying his outstanding cost award from the net proceeds of sale, leaving me to conclude the Respondent places financial issues above court ordered obligations; and f) On September 17, 2019, in a mortgage action against the parties, Justice Gray ordered that the Respondent pay to the Applicant costs of $3,000. These costs remain outstanding. [63] On the other hand, the Applicant has complied with the financial disclosure ordered. [64] Family Law Rule 1(8) (a) through (c) provides:
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;
[65] Family Law Rule 2(2) through (4) provide:
(2) The primary objective of these rules is to enable the court to deal with cases justly. (3) Dealing with a case justly includes, (a) ensuring that the procedure is fair to all parties; (b) saving expense and time; (c) dealing with the case in ways that are appropriate to its importance and complexity; and (d) giving appropriate court resources to the case while taking account of the need to give resources to other cases. (4) The court is required to apply these rules to promote the primary objective, and parties and their lawyers are required to help the court to promote the primary objective.
[66] As for the importance of financial disclosure in family cases, the Court of Appeal in Roberts v. Roberts, 2015 ONCA 450 stated:
[11] The most basic obligation in family law is the duty to disclose financial information. This requirement is immediate and ongoing. [12] 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. [13] Financial disclosure is automatic. It should not require court orders – let alone three - to obtain production.
[67] However, the Court of Appeal in Roberts cautioned that the striking of pleadings is to be done sparingly and only in exceptional cases:
[15] The power to strike out the pleadings is to be used sparingly and only in exceptional cases. This is such a case. The appellant’s conduct in ignoring court orders and failing to follow the basic principles of family law litigation put him in the exceptional category of cases where the judge’s discretion to strike his pleadings was reasonably exercised.
[68] It is important to ensure that the party in default is clearly given one last chance to comply with the court order(s) and is aware of the consequences, that might be ordered, if the party in default continues to wilfully disregard compliance with the court order(s). That was clearly done in this case. Despite knowing that his pleadings might be struck, the Respondent continued to disregard his financial disclosure ordered by the court and required under the Family Law Rules. [69] In Van v. Palombi, 2017 ONSC 2492, at para. 30, the Divisional Court stated the three-pronged test to be applied when striking pleadings: a) Is there a triggering event justifying the striking of pleadings? b) Is it appropriate to strike the pleadings in the circumstances of the case? c) Are there other remedies in lieu of striking the pleadings that might suffice? [70] I am satisfied that this is the exceptional case where the only appropriate remedy is to strike the Respondent’s pleadings. I conclude this because: [71] The triggering event is the non-compliance with the two Price J. Orders. The Respondent remains in breach of the Price J. Orders. The Respondent has not taken steps to comply with the Price J. Orders or failed to explain why he cannot comply with the Price J. Orders. [72] I recognize that it is best for the administration of justice that both parties present their case fully at trial and the judicial determination be made on the merits. However, where one party wilfully obstructs the fair and proper prosecution and determination of the issues in the proceeding, the administration of justice will fall into disrepute if the court permits the defaulting party to benefit from such actions to the prejudice of the opposing party. [73] The trial is scheduled for May 2020 – it will now have to be delayed. Financial disclosure is key to the remaining issues at trial. The Respondent has, in addition to the mandatory disclosure requirements in the FLA, had two court orders requiring disclosure with deadlines. The Respondent was given one last chance to comply with the court ordered disclosure. When given this last chance, the Respondent knew that non-disclosure could lead to the striking of his pleadings, on a motion scheduled three months later. The Respondent has some of the documents to be produced but has simply failed to produce them or produce them fully. The Respondent has a history of non-compliance with court orders. During much of the time, the Respondent has been represented by counsel and, thereby, it is assumed he was aware of his disclosure obligations under the FLA and the Price, J. Orders. There are no child custody/support issues. [74] In this case, the primary objective of the Family Law Rules is being disregarded by the Respondent to the prejudice of the Applicant. This is the exceptional case that, unless the Respondent's pleadings are struck, it will bring the administration of justice into disrepute. [75] It is appropriate that the Respondent’s pleadings are struck. [76] Given the Respondent’s history of his actions and failures in this case, I am of the view that there is no other remedy that will appropriately and reasonably deal with the Respondent’s non-compliance with the Price J. Orders.
Conclusion
[77] The Respondent’s pleadings are hereby struck.
Costs
[78] The Applicant shall serve and file written submission on entitlement and quantum within two weeks of the release of these reasons. Written submissions shall be limited to 5 pages, with attached Costs Outline and any authorities. [79] The Respondent shall have two weeks thereafter to serve and file responding submissions. Written submissions shall be limited to 5 pages with any authorities relied on attached. [80] There shall be no reply submissions without leave.
Ricchetti J. Date: January 6, 2020