COURT FILE NO.: FS-18-6867 DATE: 20200120 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Karen Elizabeth McCormack, Applicant AND: Joseph Randal Fishbayn, Respondent

BEFORE: C. Horkins J.

COUNSEL: Rick Peticca, for the Applicant Joseph Randal Fishbayn, appearing in person

HEARD at Toronto: January 16, 2020

REASONS FOR DECISION

Introduction

[1] After a 28 year marriage, the parties separated on December 15, 2012. Since then the Respondent has not provided financial disclosure and has failed to comply with court orders. Further he is not paying spousal support.

[2] The Applicant brings this motion for orders directing the Respondent to pay spousal support, striking the Respondent’s Answer and permitting her to proceed to an uncontested trial with affidavit evidence.

[3] The Applicant has filed a detailed affidavit to support her motion. In response, the Respondent filed a brief half page affidavit that makes general unsupported statements that do not challenge the Applicant’s detailed evidence.

[4] The Applicant’s motion is allowed. My reasons are as follows.

The Evidence

[5] The Applicant filed two detailed affidavits that are reviewed below.

[6] The Respondent’s affidavit consists of the following broad statements with no supporting evidence.

[7] The Respondent states that he is unable to produce “professional accounts” due to “financial reasons”. He does not describe the “financial reasons”. Presumably the professional accounts refer to the business records of his dental practice. He does not dispute the Applicant’s evidence that he has a dentistry practice.

[8] The Respondent says he has “released all requested documents that he has at the present”. This cannot possibly be true given the Applicant’s uncontested evidence that he works as a dentist. As explained below, there are numerous documents that have not been produced.

[9] The Respondent says that he is not uncooperative and has never knowingly withheld information. The Applicant’s evidence shows that this is not true.

[10] The Respondent states that the one-time capital gain in his 2015 income tax return is not “representative” of his “actual professional income”. I will address this statement below.

[11] The Respondent says that he paid support to the Applicant from his “personal capital” until he was no longer able to do so. No details are provided.

[12] Finally, the Respondent says that he has “requested time to analyze the new practice income”. The Respondent has never provided an analysis of his income and there is no evidence to explain why he would do so now, more than seven years after separation. This is yet another tactic to delay the family litigation.

[13] The Respondent’s evidence is not responsive to the Applicant’s detailed affidavits. Her evidence is not challenged and I accept it as fact. It is set out below.

[14] This was a long-term traditional marriage. The parties have two children, now independent adults. Before the children were born, the Applicant worked as a registered nurse. It was agreed that she would give up her nursing career and stay at home to raise the children.

[15] Throughout the marriage the Respondent was a successful dentist. The family enjoyed a high standard of living with a home in Toronto and an expensive cottage property in Muskoka.

[16] After separation, the home and cottage were sold. The net proceeds of the home are being held in trust. The net proceeds of the cottage were equally divided.

[17] In 2014, the parties started a collaborative law process. Both had counsel. The Respondent refused to negotiate in good faith. He would not commit to a financial position and refused to provide disclosure. As a result, the process dragged on with no resolution. The Respondent refused to provide even the most basic disclosure. The Applicant had no choice but to opt out of the collaborative process. She commenced this application in December 2018.

[18] The Respondent filed an Answer and a financial statement that does not comply with the Family Law Rules. In his financial statement sworn on April 26, 2019, he states that his 2018 gross income from all sources was $115,719.13. The Respondent did not attach the required documents to prove this income (and has never provided such proof). Instead, he attached his 2015 income tax return. There are no other income tax returns attached and no notices of assessment.

[19] The 2015 income tax return records that, in 2015, the Respondent’s gross professional income was $659,327. The Respondent deducted expenses of $468,041.90 and reported net professional income of $191,361.46. The line 150 income was $379,417.71. This included a taxable gain of $176,863.25 from the sale of the family cottage.

[20] The Respondent attached other unexplained miscellaneous documents to his financial statement: unidentified notes of expenses, a one page document titled Chronological Business History, a statement of claim, a notice of garnishment, a RBC March 2019 RRSP statement, a March 2019 line of credit statement, and a January 2019 AMEX statement of account.

[21] There have been two case conferences, both before Justice Stevenson. Prior to the first case conference, the Applicant’s counsel asked the Respondent to provide the required disclosure so the parties could have a meaningful discussion at the case conference. The Applicant served the Respondent with a detailed Request for Information. The Respondent did not reply.

[22] At the first case conference on June 21, 2019, Justice Stevenson recorded that equalization and spousal support were the main issues. She stated that there are “many outstanding disclosure issues … the Applicant seeks significant disclosure today which is reasonable and needs to be provided so that the matter moves forward.” Justice Stevenson made several orders. The Respondent was ordered to produce all of the disclosure in the Applicant’s Request for Information by August 30, 2019, the Applicant was allowed to bring motions if necessary and a further case conference was scheduled for September 23, 2019.

[23] On July 22, 2019, the Applicant’s counsel sent the Respondent a letter asking him to sign enclosed Authorizations and Directions to allow the Applicant to request disclosure from the five major banks. This was disclosure that the Respondent was ordered to obtain. The Respondent signed and returned the Authorizations. Aside from taking this step, he has not complied with Justice Stevenson’s order.

[24] Applicant’s counsel sent the Authorizations to the banks and received the following replies.

[25] On August 20, 2019 and August 26, 2019, the Bank of Montreal ("BMO") advised that based on a preliminary search, the Respondent had the following accounts with this financial institution: Business Accounts for Plans - Account#***393; BMO Term Investments RRSP Account#***664

[26] BMO also advised that there would be a cost to produce the documents ($5 per document/statement), even if they were provided electronically. The total cost of production was $1,469 and payment was required before release of the documentation.

[27] The Applicant's counsel wrote to the Respondent on September 4, 2019, advising him of the cost to obtain the bank statements from BMO and requested payment for same. On September 5, 2019, the Respondent replied by e-mail advising that he did not have the "funds for this". In addition, he expected the Applicant's counsel to access the funds from an inactive business account he has with BMO bank. The Applicant's counsel wrote to the Respondent advising him that he is obligated to comply with the disclosure order and it was not the Applicant’s obligation to incur such expense. The Applicant's lawyer also suggested that he could draw upon his BMO term investment to make partial payment towards the cost of obtaining the bank statements.

[28] The Respondent did not respond to this correspondence and has not paid the fee to BMO. As a result, he has not produced the BMO statements to the Applicant as ordered.

[29] On September 4, 2019, ScotiaBank wrote to the Applicant's counsel advising that there were no accounts held with this financial institution for the Respondent or his businesses, but there may be accounts with the Scotiabank's investment subsidiary - Scotia MacLeod. The Applicant's counsel has written to Scotia MacLeod but has not received any response.

[30] RBC provided the Applicant’s counsel with some disclosure regarding a Loan Application that the Respondent submitted in 2016. This Loan Application revealed that the Respondent did and/or does have at least one account with ScotiaMacLeod which he has not disclosed.

[31] On September 23, 2019, the parties returned to court for a further Case Conference. Justice Stevenson confirmed that the Respondent had not complied with her order. The Respondent claimed (without any proof) that he could not afford to hire an accountant to complete his income tax returns or pay BMO $1,469 to obtain his bank statements. This was not accepted as an excuse for non-compliance with the order. Of note, his business account showed that he had a balance of $10,114.84 as of July 31, 2019 and yet he would not pay the BMO fee.

[32] Justice Stevenson recorded that the Respondent’s failure to comply meant that the case conference was “a wasted attendance” and nothing was accomplished. She ordered that if the Respondent did not fully comply in 20 days, the Applicant had the right to bring any motion deemed necessary to address the Respondent’s non-compliance. The Respondent was ordered to pay the Applicant costs of $3,500 in 30 days.

[33] The Respondent has not complied with Justice Stevenson’s orders. Disclosure remains outstanding, costs have not been paid and the Respondent refuses to pay the $1,469 fee to BMO for release of his statements to the Applicant.

[34] On September 26, 2019, RBC sent an e-mail to the Applicant's counsel providing him with the following:

• Statements for RBC Business Platinum Avion, account ending *3502 and account ending *3510 found under "Dr. Randal Fishbayn Dentistry Professional Corporation" from September 28, 2016 to June 30, 2019.
• Statements for RBC Business Account, account number 6542-1039916 found under "Dr. Randal Fishbayn Dentistry Professional Corporation" from September 7, 2016 to July 31, 2019.

[35] The RBC documents reveal that in the Respondent’s business account, number 6542-1039916, he was depositing at times on average $100,000 per month. From February 28, 2018 to March 29, 2018, the Respondent deposited as much as $602,000 into this business account, while simultaneously stating that he had no funds to pay spousal support or the $1,469 fee to BMO.

[36] On September 30, 2019, RBC provided the Applicant's counsel with income information that the Respondent had given to RBC in 2016, when he applied for a business loan. The following was provided:

• 2014 T1 Income Tax Returns (Personal);
• 2015 Income Tax Return (Personal), which shows a Line 150 income to the Respondent of $379,417.71;
• Business Plan for his Dental Practice;
• Agreement of Purchase and Sale between the Respondent and Polonez Deli, dated May 4, 2016 in the amount of $45,000;
• RBC Personal Statement of Affairs, dated June 20, 2016 and signed by the Respondent confirming that the Respondent has $1,025,000 in assets and an annual income of $379,000;
• RRSP Statement from PH&N Investment Services for account number 941064 from January 1, 2016 to March 31, 2016, which evidences a balance of $15,873.
• Bank statement from BMO for the Respondent's Personal Chequing Account, account number 2435-1016-393 from December 1, 2015 to December 31, 2015, showing a closing balance of $29,962.01;
• Bank statement from TD Canada Trust for the Respondent's Personal Chequing Account, account number 6409093 from March 31, 2016 to April 29, 2016, evidencing a beginning balance of $17,656.75 and a closing balance of $11,829.13;
• Bank statements from TD Canada Trust for the Respondent's Business Chequing Account, account number 5220295 from December 31, 2015 to January 29, 2016, showing a beginning balance of $53,598.55 and a closing balance of $29,602.82;
• Bank Statement from BMO for the Respondent's Line of Credit Account, account number 2203-3516-705 and an available balance of $75,453.12.
• Bank Statement from RBC for the Respondent's Investment Account, account number 4390657-122000 which shows a market value of the Respondent's Non-Registered Investment Accounts of $553,697.60 as of May 15, 2016;
• Bank Statement from RBC for the Respondent's Tax-Free Savings Account, account number 792307-821100 which shows a balance of $44,572.35 as of June 15, 2016;
• Bank Statement from ScotiaMcLeod Wealth Management, account number 29373-12 for the period December 1, to December 31, 2015, which shows a balance of $4,951.

[37] On October 23, 2019, TD Canada Trust provided the Applicant’s counsel with the Respondent’s following bank statements and records:

• Personal Bank Account, account number 6426508 from September 16, 2015 to November 30, 2017, showing a balance of $1,259,438.66 as of November 3, 2015.
• Personal Bank Account, account number 6409093 from September 16, 2015 to June 28, 2019, evidencing a deposit of $325,784.50 on September 16, 2015 and a balance of $125,784.50 as of September 16, 2015;
• Personal Line of Credit, account number 3265162 from December 1, 2016 to June 28, 2019;
• Dr. Joseph Fishbayn Business account, account number 5220295 from May 15, 2012 to June 28, 2019 (100% owned by the Respondent);
• Dr. Levin and Dr. Fishbayn Business account, account numbers 5220287 from May 15, 2012 to August 14, 201; and 5220279 from May 15, 2012 to August 14, 2017 (60% owned by the Respondent).

[38] While the Applicant was able to obtain some disclosure directly from the banks, the Respondent remains in breach of the orders made on June 21 and September 23, 2019. His non-compliance is significant. He has not produced the following:

• An updated and sworn Financial Statement with all supporting documentation for date of marriage, date of separation and current values. The Respondent has provided a sworn financial statement, dated June 14, 2019; however, he has failed to include a number of bank accounts on his financial statement and he has not provided substantiating documentation relating to same.
• Personal Income Tax Returns with all schedules and attachments for 2016, 2017 and 2018.
• Personal Notices of Assessment and Re-Assessments (if any) for 2012, 2014 to 2018.
• A copy of any application made by the Respondent within the past five years for a loan, line of credit, credit card or mortgage company, including any statement of net worth provided to the company.
• A copy of all insurance policies held in the Respondent's name setting out the amount of insurance, the amount of the premium, the beneficiary, the cash surrender value and the accumulated dividends (if any).
• Copy of a recent and unredacted Credit Report from either Equifax or Transunion.
• Any agreements pending purchase or sale of property;
• Any agreements to lease property, either for personal use or corporate use, from January 1, 2012 to June 30, 2019.
• Copies of all bank statements for all personal accounts held solely or jointly with another person, or held in trust, or which the Respondent has signing authority, from January 1, 2012 to June 30, 2019 with the BMO and/or Scotia Macleod.
• Copies of all credit card, lines of credit and/or loan statements for all personal accounts held in the Respondent's name or jointly with another person, or held in trust, or which the Respondent has signing authority, from January 1, 2012 to June 30, 2019, with BMO and/or Scotia Macleod.
• For any personal closed bank accounts or closed credit card accounts in the Respondent's name or held jointly with another person, or held in trust, or which the Respondent has signing authority, that have been closed from January 1, 2012 to June 30, 2019, a signed letter from the bank confirming the title holder(s) on these accounts, when these accounts were opened and when they were closed.
• A copy of every Corporation Income Tax Return, with all schedules, attachments and information slips, filed with the Canada Revenue Agency and Notices of Assessment or Re-assessment, by any corporation that the Respondent has an interest in either directly or indirectly from January 1, 2012 to June 30, 2019, including but not limited to, Dr. Randal Fishbayn Dentistry Professional Corporation.
• A copy of any application made by or for any business/corporation that the Respondent has an interest in either directly or indirectly, including but not limited to, Humber Bay Dental Centre; Dr. Randal Fishbayn Dentistry Professional Corporation, for a loan, line of credit, credit card of mortgage, including any statement of income or net worth provided by or for the business, including but not limited to, any and all applications made to RBC for financing, lines of credit and/or business credit cards, from January 1, 2012 to June 30, 2019.
• A Certified Business Valuation of any business/corporation that the Respondent has an interest in either directly or indirectly as of the date of marriage and date of separation, including but not limited to Humber Bay Dental Centre and Dr. Randal Fishbayn Dentistry Professional Corporation, as well as an Income Analysis from January 1, 2012 to June 30, 2019.
• Year-end financial statements for all businesses/corporations that the Respondent has an interest in either directly or indirectly, including income and expense statements; list of assets and liabilities; balance sheet and income statement or statement of profit and loss, of the corporation and of any related corporations or subsidiaries from January 1, 2012 to December 31, 2018;
• A copy of the shareholders' agreement for Dr. Randal Fishbayn Dentistry Professional Corporation and/or any other corporation that the Respondent has an interest in either directly or indirectly;
• A copy of the Articles of Incorporation for Dr. Randal Fishbayn Dentistry Professional Corporation and/or any other corporation that the Respondent has an interest in either directly or indirectly;
• Copies of all bank statements for all business/corporate accounts for Humber Bay Dental Practice; Dr. Randal Fishbayn Dentistry Professional Corporation, and/or any other business/corporation that the Respondent has an interest in either directly or indirectly with Bank of Montreal and/or Scotia Macleod from January 1, 2012 to June 30, 2019.
• Copies of all credit cards, lines of credit and/or loan statements for all business/corporate accounts with the Bank of Montreal and/or Scotia Macleod, for Humber Bay Dental Practice; Dr. Randal Fishbayn Dentistry Professional Corporation; and/or any other business/corporation that the Respondent has an interest in either directly or indirectly, from January 1, 2012 to June 30, 2019;
• For any corporate bank accounts or credit card, line of credit and/or loan accounts for any business/corporation in the Respondent's name, including but not limited to, Humber Bay Dental Practice; Dr. Randal Fishbayn Dentistry Professional Corporation; and/or any other business/corporation that the, Respondent has an interest in either directly or indirectly in the Respondent's name or held jointly with another person, or held in trust, or which the Respondent has signing authority, that have been closed from January 1, 2012 to June 30, 2019, a signed letter from the bank confirming the title holder(s) on these accounts, when these accounts were opened and when they were closed.

[39] The single half page affidavit that the Respondent filed in response to this motion is not helpful. His general and unsupported statements do not excuse his serious non-compliance with court orders. He states that he cannot provide the disclosure “due to financial reasons” that have never been explained. The disclosure that the Applicant has obtained from the banks shows that he has had significant sums of money in his accounts. He has not produced any current banking or income information.

[40] The Respondent states that he has never knowingly withheld information. This is simply untrue. He has refused to provide even basic financial disclosure since the parties started the collaborative process in 2014.

Spousal Support

[41] The Applicant is entitled to spousal support and this is not contested.

[42] After the parties' second child was born in April 1987, the Applicant was a full-time homemaker until the parties' separation. The Applicant was never able to enhance her skills or further her career. Her role as the full time homemaker allowed the Respondent to further his career as a dentist during the marriage.

[43] The Applicant describes the Respondent as a successful dentist currently practicing under Dr. J. R. Fishbayn General Dentistry located at 2334 Lakeshore Boulevard West, Etobicoke, Ontario M8V 1B6 and/or through the dental practice operating under the name Humber Bay Dental Centre, located at 2436 Lakeshore Boulevard West, Etobicoke, Ontario M8V 1C4. He has been practising for over thirty (30) years. The Respondent has not contested this evidence.

[44] Throughout the marriage, the Respondent was the financial provider, and the Applicant was and is financially dependent on him. The Respondent was able to grow his dental practice and earn a significant income while the Applicant was home with the children. In addition to their cottage, the parties were members of private clubs and often travelled.

[45] The Applicant needs financial support. She is 71 years of age and has been out of the workforce since 1987. Her only sources of income are her Old Age Pension, her CPP Pension and some investment income that she has been forced to draw from to support herself. The Applicant is currently unable to purchase accommodation for herself.

[46] The Respondent conceded in his Answer that the Applicant is entitled to spousal support but does not agree that the support be for an indefinite duration. Despite the Respondent's agreement that the Applicant is entitled to spousal support, he is not providing her with any financial support.

[47] The Respondent has the ability to pay spousal support and is simply refusing to do so. For a period of time post-separation, the Respondent made uncharacterized payments to the Applicant.

[48] From January 2013 to November 2018, the Respondent provided the Applicant with uncharacterized funds towards an advance on equalization or alternatively an advance on spousal support.

[49] From about January 2013 to December 2015, the Respondent made sporadic payments of $1,600 on an almost monthly basis to the Applicant. This was in addition to the Respondent paying the household and/or credit card bills during that time.

[50] From about January 2016 to December 2016, the Respondent made monthly payments to the Applicant in the amount of $4,000 per month on account of an uncharacterized advancement against equalization and/or spousal support.

[51] From about January 2017 to December 2017, the Respondent made monthly payments to the Applicant of $4,000 per month, except for the months of March, April and May 2017, when the Respondent made monthly payments of $2,000.

[52] From January 2018 to November 2018, the Respondent made monthly payments of $4,000 per month, which included a signed Direction by the parties to pay the sum of $24,000 from the Respondent's 50% share of property sale proceeds which represents six months of the monthly payment of $4,000.

[53] The Applicant has not received any financial support from the Respondent since November 2018. She seeks a temporary spousal support order effective January 1, 2019.

[54] Post-separation, the Respondent has maintained the same standard of living as he did during the parties' marriage. The Respondent continues to maintain an expensive club membership and travels often. When their son was recently married, the Respondent booked a room at the Elora Mill Inn for at least two 2 nights, at a cost of over $300 per night.

[55] Due to the Respondent's refusal to cooperate in the resolution of this matter, the Applicant's equity in the Matrimonial Home has been tied up for years. As of July 19, 2018, there is a holdback of trust funds in the amount of $266,806.18 in the real estate solicitor's trust account.

[56] This spousal support order is based on the best evidence available, the Respondent’s 2015 income tax return.

[57] As noted above the 2015 income tax return records gross professional income of $659,327. Expenses of $468,041.90 were deducted and he reported net professional income of $191,361.46. The line 150 income was $379,417.71. This included a taxable gain of $176,863.25 from the sale of the family cottage.

[58] The 2014 income tax return is also available. It records gross professional income of $665,288 and expenses of $501,873.23. His line 150 income was $163,474.73.

[59] The Respondent argues that the inclusion of the one-time capital gain in 2015 from sale of the cottage, is unfair as it does not represent his income. Therefore, he disagrees with the Applicant’s position that spousal support should be set using his line 150 income of $379,418.

[60] It is not necessary on this interim motion to resolve the one-time capital gain issue. The Respondent’s expenses are significant and have not been proven. The expenses he deducted, even if proven, would not all be allowed for the purpose of determining his income for support. If 50% of the expenses are allowed and if the capital gain issue is ignored, his line 150 income would be $425,327. This is a reasonable approach to his expenses. Based on this analysis, it is fair to impute income of $379,418 to the Respondent.

[61] In summary, based on the Respondent's 2015 income of $379,418 and the Applicant's 2018 income of $63,003, I find that the Applicant is entitled to temporary spousal support in the amount $12,314.50 per month. This reflects an amount between the mid to high points in the Spousal Support Advisory Guidelines. This is appropriate given the long-term marriage, the standard of living they enjoyed, and the Applicant’s needs.

[62] Pending further order of the court, the Respondent shall pay the Applicant interim spousal support of $12,314.50 per month effective January 1, 2019 pursuant to s. 15.2(2) of the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.).

The Respondent’s Answer is Struck

[63] The Applicant seeks an order striking the Respondent’s Answer and allowing her to proceed to an undefended trial on affidavit evidence.

[64] When a party fails to comply with a court order, Family Law Rule 1(8) gives the court the power to make “any order that it considers necessary for a just determination of the matter”. This includes an order striking the pleading.

[65] A pleading should only be struck in circumstances that are “exceptional and egregious”.

[66] As the court stated in Manchanda v. Thethi, 2016 ONCA 909 at para. 13, the obligation to disclose financial information is the most basic obligation in a family law proceeding. The obligation is strict, immediate and ongoing. 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. A party who chooses “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.”

[67] In Roberts v. Roberts, 2015 ONCA 450 at para.12, the court warned that the “[f]ailure 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.” Further, it should not be necessary to issue court orders to obtain compliance with this immediate obligation.

[68] In Norris v. Norris, 2019 ONSC 2795 at para 20 the court set out a three-step test governing the exercise of judicial discretion to strike a party's pleadings:

1. Is there a triggering event justifying the striking of pleadings?
2. Is it appropriate to strike the pleadings in the circumstances of the case?
3. Are there other remedies in lieu of striking pleadings that might suffice?

[69] For the following reasons I have decided to strike the Respondent’s Answer.

[70] There are triggering events that justify this order. The Respondent has refused to provide disclosure since the start of the collaborative process in 2014. He has refused to comply with two court orders. These orders set out a detailed list of what he was required to produce and a deadline for compliance was included. The Respondent has not paid the cost order.

[71] There is no point in issuing yet another order for compliance. The Respondent has demonstrated that he has no intention of complying with the court orders. On this motion, the Respondent did not even bother to file a meaningful affidavit. He has had years to produce his financial disclosure. His overall approach is to stall the final adjudication of the issues. I find that he has demonstrated willful non-compliance with his disclosure obligations and the court orders. Such conduct is egregious and exceptional, and it is appropriate to strike his pleading. No other remedy will suffice.

Conclusion

[72] I make the following orders: (1) Effective January 1, 2019, the Respondent is ordered to pay to the Applicant interim monthly spousal support in the amount of $12,314.50 a month. (2) The Respondent’s Answer is struck pursuant to Family Law Rule 1(8); (3) The Applicant may proceed by way of affidavit evidence to an uncontested trial. (4) Approval of this order as to form and content is dispensed with. (5) A Support Deduction order shall issue. (6) If the parties cannot agree on the costs of this motion, they shall exchange brief written submission and file them with the court by February 28, 2020.

C. Horkins J. Date: January 20, 2020