Court File and Parties

COURT FILE NO.: FS-18-001278 DATE: 2021-04-28 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Zahra Khorami Sheresht, Applicant AND: Ahmad Hossein Abadi, Respondent

BEFORE: M. Kraft, J.

COUNSEL: Nilufa Husein, for the Applicant Self-represented, for the Respondent

HEARD: April 27, 2021

CORRECTED ENDORSEMENT

[1] Today was the return of the applicant’s motion to strike the respondent’s pleadings on account of his failure to comply with five Court orders requiring him to make financial disclosure. The motion proceeded by video conference. While the respondent, Aham Hossein Abadi (“Mr. Hossein Abadi”) is self-represented, Sourena Sarbazevatan, appeared only as a friend of the Court, to assist Mr. Abadi in connecting to the motion via the Zoom platform. Mr. Sabazevatan did not appear as Ms. Abadi’s counsel or agent, as he has in the past.

[2] The relief being sought by the applicant, Zahra Khorami Sheresht, (“Ms. Sherest”) is as follows:

a. An order noting the respondent, Ahmad Hossein Abadi (“Mr. Abadi”) in contempt of court;

b. An order striking Mr. Abadi’s pleadings and permitting her to proceed with an uncontested trial by filing a 23C Affidavit;

c. An order for costs on a full indemnity basis against Mr. Abadi;

d. An order for costs for each day disclosure remains outstanding if Mr. Abadi is given any further indulgences or adjournments;

e. An order vacating any future court appearances scheduled in this case; and

f. An order that all costs including unpaid costs and any other costs ordered on this motion, are to be paid in full and send by bank draft or money order, delivered by courier or process server to Ms. Sherest’s counsel.

[3] This motion proceeded orally today in accordance with my Endorsement, dated March 4, 2021 (“March 4th Endorsement”), in which, among other things, I stayed Mr. Hossein Abadi’s pleadings until such time as he complies with the outstanding financial disclosure orders made in this matter and precluded Mr. Hossein Abadi from taking any further steps in this case without leave of the court and until he had complied with all prior court orders.

[4] In my March 4th Endorsement, I set out specific timeframes within which Mr. Hossein Abadi was to follow and detailed the further steps he was to take to produce financial disclosure to Ms. Sherest. I indicated that if Mr. Hossein Abadi did not comply with the terms of my March 4th Endorsement, Ms. Sherest’s motion to strike his pleadings was to be heard orally today (April 27, 2021) and that no further materials needed to be filed on Ms. Sherest’s behalf.

[5] In support of the motion, Ms. Sherest relies on the following:

a. Her Notice of Contempt Motion, dated September 3, 2020;

b. Her affidavit, sworn on August 6, 2020;

c. Her affidavit, sworn on August 20, 2020;

d. Her affidavit, sworn on December 31, 2020;

e. Her affidavit, dated January 13, 2021;

f. Her Factum, dated August 20, 2020;

g. Her Factum dated January 8, 2021; and

h. Her reply affidavit, sworn on January 24, 2021.

Procedural History

[6] I set out a detailed procedural history of this matter in my March 4th, Endorsement. By way of a brief summary, the chronology of this case is as follows:

a. On March 20, 2018, Ms. Sherest issued an Application seeking, among other things, a divorce, sole custody of the parties’ three children, authorization to travel with the children without the father’s consent; child support, spousal support, restraining orders; a non-depletion order, equalization of net family property and exclusive possession of the matrimonial home.

b. On April 24, 2018, Akbarali, J., made an order dismissing the mother’s motion to restrain the father’s depletion of property.

c. On June 7, 2018, Mr. Hossein Abadi filed an Answer and Claim, in which he seeks, among other things, custody; a non-depletion order; an order for the sale of the matrimonial home; an order for the unequal division of net family property in his favour; and an order requiring the mother to partake in a mental health assessment

d. On July 9, 2018, a case conference was conducted by Paisley, J.

e. On June 30, 2020, a case conference was held by Hood, J. Hood, J. ordered Mr. Hossein Abadi to provide an updated financial statement by July 17, 2020, and to provide by July 17, 2020, his last three years of bank statements as requested by Ms. Sherest. Mr. Hossein Abadi was to provide the statements by way of affidavit along with all third-party requests and responses as Exhibits to his affidavit, including all information relating to the closure of any bank accounts. Similarly, Ms. Sherest was to provide an updated financial statement on or before July 17, 2020, along with her last two income tax returns by way of affidavit. If unable to do so, she was to provide all third-party requests and requests as Exhibits to her affidavit. This was the 1st financial disclosure order made in this case;

f. On August 19, 2020, a settlement conference was held by Hood, J.

g. On September 3, 2020, Mr. Hossein Abadi’s motion for unsupervised parenting time was returnable before Boucher, J. Her Endorsement indicates that the court was not in a position to hear the father’s motion for access because the OCL report was not completed. Two months had passed since Hood, J. made his disclosure order and Mr. Hossein Abadi had not complied with the order. As a result, Boucher, J. ordered Mr. Abadi to comply with Hood, J.’s disclosure order and to personally, or by agent, or attorney/power of attorney, obtain the financial documents referred to in that order. This was the 2nd financial disclosure order made in this case. Specifically, Boucher, J. ordered Mr. Hossein Abadi to:

i. provide copies of his written communications to the financial institutions or other third parties instructing them to obtain those documents, by attaching those communications to an affidavit that is to be provided to Ms. Sherest explaining the efforts he made to obtain the disclosure;

ii. attach communications composed by himself, as well as any communications composed by his agents, solicitors, or attorney/power of attorney to that affidavit; and

iii. provide a narrative account of his efforts to obtain the documents, in addition to providing copies of the communications in the affidavit, to be filed on the motion. Boucher, J. clarified that Justice Hood’s Order applied not only to Mr. Hossein Abadi’s account(s) in Kuwait but also anywhere in the Middle East or Iran.

h. Boucher, J. adjourned the issue of Mr. Hossein Abadi’s motion for unsupervised access to S., along with the issues of contempt/financial disclosure to October 23, 2020, to verify his compliance with the endorsement and for the court to assess what other relief might be available and appropriate in the circumstances.

i. On October 23, 2020, I heard Ms. Sherest’s motion to cite Mr. Hossein Abadi in contempt of both the orders of Hood, J., dated June 30, 2020 and Boucher, J., dated September 3, 2020, for his failure to deliver financial disclosure. At the motion, Mr. Hossein Abadi did not deny that he had not complied with either court order. His counsel made submissions that he was unable to comply with his obligation to produce financial disclosure as a result of being devastated upon receipt of the assessment report of the OCL on October 9, 2020. Even though, it had been five months since the initial financial disclosure order was made by Hood, J., on October 23, 2020, I gave Mr. Hossein Abadi “one last opportunity” to comply with the prior disclosure orders. I extended the time frame within which he was to deliver his financial disclosure to November 9, 2020. This was the 3rd financial disclosure order made in this case. In particular, I ordered:

i. Mr. Hossein Abadi to comply with the financial disclosure orders of Hood, J., dated June 30, 2020, and Boucher J., dated September 3, 2020 by producing the required financial disclosure and affidavits by no later than November 9th, 2020 at noon;

ii. If Mr. Hossein Abadi did not comply with subparagraph (i) and produce the ordered financial disclosure by noon on November 9, 2020, Ms. Seresht was to return her motion to strike the father’s pleadings before me, if available, during the week of November 16, 2020 (on either Tuesday, November 17th, 2020 or Thursdays, November 19th, 2020), to be heard prior to the TMC/SC scheduled for November 23, 2020; and

iii. Mr. Hossein Abadi was ordered to pay Ms. Sherest costs of the motion in the fixed amount of $1,000 within 60 days.

j. On January 14, 2021, Ms. Sherest’s motion to strike Mr. Hossein Abadi’s pleadings was returned before me. Mr. Sabazevetan, as agent for Mr. Hossein Abadi, sought an adjournment on his behalf. Ms. Sherest opposed the adjournment of the motion. Mr. Sabazevetan advised the court that Mr. Hossein Abadi had provided Ms. Sherest with financial disclosure of his Canadian bank accounts but that he needed more time to obtain his banking records in the Middle East. Mr. Hossein Abadi had sworn an affidavit on November 9, 2020, which indicated that he had taken some steps to obtain banking records in Kuwait and that he was encountering difficulties. It had now been 5 ½ month since the initial disclosure order. Notwithstanding this delay, I gave Mr. Hossein Abadi a further adjournment, for a brief two-week period, to comply with the outstanding financial disclosure orders. In particular, the terms of my January 14, 2021 order contained the terms of the Orders of Hood J., dated June 30, 2020, Boucher, J., dated September 3, 2020, and my order of October 23, 2020. This was the 4th financial disclosure order made in this case. In addition, I added further specific disclosure Mr. Hossein Abadi was to provide as follows:

i. Mr. Hossein Abadi was to produce the bank statements to verify the valuation date figures listed in his two prior sworn financial statement, as well as provide current day balances for his bank accounts, whether the accounts are held in Canada, the Middle East, or anywhere else worldwide. The bank accounts listed in Mr. Abadi’s June 8, 2018 financial statement include a TD joint chequing account, account #6607086; a TD joint savings account, account #6044687; an HSBC joint chequing account, account #122-090485-150; an HSBC joint savings account, account #122-0940035-203; an RBC joint chequing account, account #02874-5237110; an RBC joint savings account, account #0287450057-72; an RBC chequing account, account #0287531-0;

ii. Mr. Hossein Abadi was to produce all of the necessary disclosure regarding his ownership in the two corporations listed in his June 8, 2018 financial statement, Foulath United Corp. in Canada and Foulath United Corp, including such documents such as corporate income tax returns; corporate financial statements; shareholders ledgers; share certificates, and any other necessary documentation to verify his interests in these corporations and the value of such interests as at the date of separation and the current date;

iii. Mr. Hossein Abadi was to produce all credit card statements for the past three years for all credit cards he holds in Canada, in the Middle East and worldwide, along with the statements to verify the valuation date figures listed in both sworn financial statements;

iv. Mr. Hossein Abadi was to produce supporting documentation for the new bank accounts at RBC, account #855 and account #310 he lists on his financial statement, sworn on July 16, 2020, and bank statements for the past three years for such accounts; or from the date such accounts were opened; documentation regarding the date of statement debts listed in financial statement sworn on July 16, 2020; and whatever details possible for the silk carpets, rugs and gold he lists on both of his sworn financial statements;

v. Mr. Hossein Abadi was to produce financial disclosure for the accounts, whether bank accounts or credit cards, in the Middle East that are disclosed in the Canadian bank statements he has produces thus far to the applicant in these proceedings;

vi. Mr. Hossein Abadi was to file the document brief he delivered to Ms. Sherest on Jan 22, 2018 with the Court;

vii. If Mr. Hossein Abadi has not complied with this order and fails to produce the ordered financial disclosure by noon on January 22, 2021, Ms. Sherest was to proceed with her motion to strike Mr. Hossein Abadi’s pleadings before me on January 28, 2021, at 2:00 p.m.;

viii. If Mr. Hossein Abadi has complied with the financial disclosure set out in this order, then the parties were to file a confirmation with the Court that Ms. Sherest’s motion to strike his pleadings is no longer necessary;

ix. If necessary, by January 26, 2021, at 2:00 p.m., Ms. Sherest was to notify the court if she wishes that her motion to strike Mr. Hossein Abadi’s pleadings was to take place in writing or by video appearance; and

x. Mr. Hossein Abadi was to pay Ms. Sherest’s costs of today’s attendance, in the fixed sum of $1,500 to be paid by no later than 5:00 p.m. on January 15, 2021.

k. On January 21, 2021, Mr. Hossein Abadi did file an updated sworn financial statement and an affidavit attaching some financial disclosure. Notwithstanding this, on January 25, 2021, Ms. Sherest filed a Form 14C - Confirmation of Motion form that she was proceeding with her motion to strike Mr. Hossein Abadi’s pleadings in writing.

l. On March 4, 2021, I ordered Mr. Hossein Abadi:

i. to produce corporate income tax returns; corporate financial statements; shareholder ledgers; share certificates, and any other necessary documentation to verify his interests in both Foulath United Corp. and Foulath Holdings Ltd. In Kuwait within 30 days;

ii. to retain an expert to value his corporate interests as at the date of separation and as at the current date in Foulath United Corp. In Kuwait and in Canada and any related corporation as at the date of separation and the current date. I also ordered him to produce documentation evidencing that he had retained an expert to value these corporate interests within two weeks, with the details as to when the expert expects to be in a position to complete the report;

iii. to produce an appraisal for the land he owns in Iran to determine its value on the date of separation and at the current date and to produce documentation evidencing that he had retained an expert to value this land within two weeks, with the details as to when the expert expects to be in a position to complete the report;

iv. to email/write/correspond with various banks in Kuwait and request disclosure of all bank accounts in his name, in the name of Foulath United Corp. (Kuwait) or (Canada) or in the name of any related corporations over which he ahs control and/or credit card statements for the period January 1, 2017 to the present date and to provide documentation that he had done this within 2 weeks and details as to when the bank(s) expect to be able to deliver the bank account or credit card statements;

v. to pay the costs of Ms. Sherest’s motion to strike his answer; and to pay all outstanding costs ordered to date out of the net proceeds of sale from the sale of 4968 Yonge Street, Unit 3015, Toronto, ON currently being held in trust by a real estate lawyer. I also ordered Mr. Hossein Abadi to execute any documentation necessary to effect the payout of these costs from the real estate lawyer.

vi. if Mr. Hossein Abadi did not comply with my disclosure order that Ms. Sherest’s motion to strike his pleadings proceed orally today.

m. On March 22, 2021, I ordered Mr. Hossein Abadi to pay $10,626 as costs associated with Ms. Sherest’s contempt motion. The outstanding costs I had ordered Mr. Abadi to pay on October 23, 2020, fixed in the sum of $1,500 were added to these costs, such that Mr. Abadi was ordered to pay the costs of Ms. Sherest’s contempt motion in the total sum of $13,126, to be paid from the net proceeds of sale from the sale of 4698 Yong Street, Unit 3015, Toronto, which proceeds were being held by the real estate lawyer in trust. My March 22nd Order directed Mr. Hossein Abadi to execute a Direction/Authorization to the real estate lawyer authorizing him/her to release these funds to Ms. Sherest forthwith.

[7] Ms. Sherest advised the court that Mr. Hossein Abadi refused to approve the draft order sent to him arising from March 4th Endorsement and/or my March 22nd Endorsement. Further, the Court was advised that Mr. Hossein Abadi refused to sign the Authorization or Direction to the real estate lawyer to release costs in the sum of $13,126 from the net proceeds of sale being held in trust.

[8] Mr. Hossein Abadi’s pleadings shall be struck and this matter shall proceed by way of an uncontested trial. Ms. Sherest shall file her evidence by way of affidavit in Form 23C. This is my Endorsement and reasons for the order I have made.

Factual Background

[9] The parties were married in Tehran, Iran on October 13, 1994. They were married for 23 years before they separated on February 21, 2018.

[10] They have three children. Sa. was born February 23, 1997 (23 years old); Si. was born February 23, 2000 (19 years old); and S. was born on November 3, 2008 and is 11 years old.

[11] The parties resided in Kuwait, prior to immigrating to Canada in September 2011, as Permanent Residents of Canada. After about 45 days, the parties left Canada and then return in August 2012.

[12] Ms. Sherest and the children are Canadian citizens.

[13] While in Kuwait, Mr. Hossein Abadi ran a successful construction company, Foulath United Corp., which he began in 2010. According to Mr. Hossein Abadi, he returned to Kuwait to attend to his company which was suffering in or around December 2017. Mr. Hossein Abadi would work in Kuwait and then return to Canada every 4-6 weeks. Both parties, in their pleadings, refer to the fact that while in Kuwait, Mr. Hossein Abadi would send funds to Ms. Sherest for her support and the children in the amount of about $10,000 to $20,000 a month. Mr. Hossein Abadi, in his Answer, claims that he often sent much more money to Ms. Sherest than that in one month.

[14] Mr. Hossein Abadi incorporated his company, Foulath United Inc., in Canada in or about 2013-2014.

[15] The parties purchased a matrimonial home in Toronto located at 21 Grand Magazine Drive, Toronto, ON LPH 2603, in July 2015.

[16] In or about August 2016, Mr. Hossein Abadi returned to Kuwait to run his business from there. After several months in Kuwait, he applied to a visitor’s visa to Canada. He came to Canada in December 2017. It is the mother’s position that the father became addicted to gambling and crystal meth when he was in Kuwait.

[17] In addition to the matrimonial home, Mr. Hossein Abadi had purchased a condominium in Toronto. On November 2, 2017, Mr. Hossein Abadi sold the condominium located at 4968 Yonge Street, Unit 3015, Toronto, ON M2N 5N7, which transaction closed on December 14, 2017. Mr. Abadi received a portion of the net proceeds of sale in the sum of $151,290.78. There was a hold-back on the remainder of the proceeds since Mr. Abadi did not have status in Canada, in the approximate amount of $165,000, for income tax purposes. In Ms. Sherest’s Application she pleads that once the Canadian government issues a Tax Certificate and the real estate lawyers pays the taxes, the remainder of these funds will be released to Mr. Hossein Abadi.

[18] Sometime in 2017, the Yonge Street condominium was sold and the proceeds were divided by the parties. The details as to how the proceeds were divided is not clear as the parties’ were still married at that time.

[19] The marriage ended on February 24, 2018, when Mr. Hossein Abadi was charged with assaulting the mother; assaulting the oldest daughter, Sa., and with possession of methamphetamine, a schedule 1 substance. He served 21 days in jail, was released on a conditional discharge with 18 months’ probation and a weapons prohibition for 10 years.

[20] On March 7, 2018, Mr. Hossein Abadi was charged with failure to comply with recognizance. He received a conditional discharge and 18 months’ probation.

[21] On April 9, 2018, Mr. Hossein Abadi was charged with failure to comply with recognizance. He received a conditional discharge and 18 months’ probation. On August 15, 2019, Mr. Hossein Abadi was charged with failure to comply with his probation. This charge is pending in the criminal courts.

[22] On December 13, 2018, a real estate lawyer, Marssa Giahi, wrote to both parties reporting on the sale of their matrimonial home at 21 Grand Magazine Street. The Trust Ledger Statement indicates that the home was sold to 2665282 Ontario Ltd.; that $171,250 was held back pursuant to s.116 of the Income Tax Act given that Mr. Hossein Abadi was a non-resident of Canada at the time of the sale; $50,000 was paid to Mr. Sarbazevatan (Mr. Hossein Abadi’s then matrimonial counsel); $50,000 was paid to Mr. Abedi (Ms. Sherest’s then matrimonial counsel); $61,924 was paid to HomeLife/Bayview Realty Inc. as commission; and the balance was to be held in trust by Ms. Giahi in the sum of $15,108.71. Despite the Court being told on March 4th, 2021, that a real estate lawyer was holding net proceeds of sale from the sale of Mr. Hossein Abadi’s Yonge Street property, it appears that, in fact, the real estate lawyer, Ms. Giahi, is holding $15,108.71 in trust from net proceeds of sale from the sale of the parties’ matrimonial home. This is an important fact as it requires me to amend my costs order, dated March 22, 2021.

[23] On October 9, 2020, the OCL delivered its custody and access assessment report pursuant to s.112 of the Courts of Justice Act. The OCL report recommended sole custody to the mother; no access between S. and the father at this time; and no contact or communication between the mother and the father. On October 23, 2020, I granted Ms. Sherest custody of S. based on the recommendations of the OCL and dismissed Mr. Hossein Abadi’s motion for supervised or unsupervised access to S., leaving this issue to be determined at trial. I did, however, order that if the matter did not proceed to trial by January 20 , 2021, that Mr. Hossein Abadi could renew his motion for access to S. Mr. Hossein Abadi has not renewed his motion for access to S.

Parties Position on Contempt/Striking Pleadings

[24] Since the fall of 2020, Ms. Sherest has been seeking an order citing Mr. Hossein Abadi in contempt of the five court orders described above in this Endorsement (made between July 30, 2020 and March 4th, 2021), for his failure to deliver financial disclosure as per the terms of all five orders. Ms. Sherest submits that she cannot advance her claims because she requires full and frank financial disclosure from Mr. Hossein Abadi to determine his income for support purposes and to determine his net family property as at the date of separation to finalize the property division issues. Mr. Hossein Abadi has had since June 30, 2020 to comply with the various financial disclosure orders.

[25] Mr. Hossein Abadi provided Ms. Sherest with some disclosure of his Canadian bank accounts for the past 3 years. However, the bank statements produced to date, do not assist Ms. Sherest with determining his income for support purposes, nor in calculating his net family property, especially since most of his assets are in the Middle East. Mr. Hossein Abadi deposes that he has never held any bank accounts in Iran and the only bank account he has held in the Middle East was in Kuwait, at the Gulf Bank. Notwithstanding the financial disclosure Mr. Hossein Abadi has produced in these proceedings, he has failed to:

a. produce disclosure regarding his income sources from the two corporations he owns in Canada and Kuwait, such as corporate income tax returns, corporate financial statements, a share register, etc.;

b. explain the source of the $2,000 a month he now claims to be earning set out in his financial statement, sworn on January 21, 2021;

c. produce bank statements from any bank accounts she insists he has in Kuwait and the Middle East;

d. provide any evidence that his businesses are closed or whether they were sold;

e. provide any evidence from which she can obtain a valuation of his two businesses Foulath United Corp. in Canada or Kuwait as at the date of separation or as at the current date;

f. provide any disclosure regarding bank accounts she insists he had in Iran at Pasargad, Tehran which she deposes were active accounts when the parties’ separated in 2018;

g. provide any disclosure regarding bank accounts she insists he held at Tijari Bank, Burgen Bank, NBK and Al-Ahli Bank in the Middle East; and

h. provide an address for the land he owns in Northern Iran, or an opinion as to its value.

[26] Ms. Sherest submits that Mr. Hossein Abadi’s continued failure to follow the Family Law Rules and to properly comply with the five prior disclosure orders has resulted in her not being able to advance her support claims or property division claims, increased her legal fees and resulted in her having exhausted her resources.

Analysis:

Contempt/Striking of Pleadings

[27] Although Ms. Sherest took the steps to serve the notice of contempt motion, with the supporting affidavit, on the father personally in accordance with Rules 31(2) of the Family Law Rules (“FLRs”), when asked by this Court as to which relief she sought under Rule 31(5), she has indicated that she seeks an order striking the father’s pleadings.

[28] Rules 31(5) of the FLR’s is reproduced below:

CONTEMPT ORDERS

(5) If the court finds a person in contempt of the court, it may order that the person,

a. be imprisoned for any period and on any conditions that are just;

b. pay a fine in any amount that is appropriate;

c. pay an amount to a party as a penalty;

d. do anything else that the court decides is appropriate;

e. not do what the court forbids;

f. pay costs in an amount decided by the court; and

g. obey any other order. O. Reg. 114/99, r. 31 (5).

[29] In light of the order being sought by Ms. Sherest, it is not necessary for me to make a finding of contempt and determine whether the court is satisfied that the three elements of the alleged contempt are met.

[30] Given that Ms. Sherest seeks an order to strike Mr. Hossein Abadi’s pleadings as a result of his failure to obey the four court orders, I turn to Rules 1(2) of the FLRs. Pursuant to sub. 1(8) of the FLRs, if a person fails to obey an order in a case or a related case, the court may deal with the failure in 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.

[31] Pursuant to subrule 1(8.4), if an order is made striking out a party’s application, motion to change or response to motion to change in a case, the following consequences apply unless a court orders otherwise:

a. The party is not entitled to any further notice of steps in the case, except as provided by subrule 25(13) (service of order);

b. The party is not entitled to participate in the case in any way;

c. The court may deal with the case in the party’s absence; and

d. A date may be set for an uncontested trial of the case.

[32] In Van v. Palombi, 2017 ONSC 2492 (Div. Ct.), the Divisional Court set out the legal principles governing the exercise of judicial discretion to strike a party’s pleadings. The court stated that these “three-pronged principles” are well-established in the case, citing several decisions of our Court of Appeal: at para. 31. The court stated the legal principles as follows:

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?; and

c. Are there other remedies in lieu of striking pleadings that might suffice?

[33] While striking a party’s pleadings for non-compliance is a remedy available to the court, it is to be reserved for only the most serious and exceptional cases. It is to be used sparingly and with great care and even reluctance. See: Stulberg v. Batler, [2009] O.J. No. 4780, 78 R.F.L. (6th) 199 (Ont. C.J.), reversed on other grounds 2010 ONSC 5299, 94 R.F.L. (6th) 375.

[34] The Ontario Court of Appeal noted in Ablett v. Horzempa, 2011 ONCA 633, [2011] O.J. No. 4391, that “the courts must use the utmost caution in resorting to this sanction due to the seriousness of denying a litigant their right to participate in the court process. This is a drastic remedy of last resort which is restricted to particularly egregious cases of deliberate, persistent non-compliance, total disregard for the court process, and failure on the part of the offending party to either comply with or adequately explain non-compliance.”

[35] In Purcaru v. Purcaru, 2010 ONCA 92 (Ont. C.A.), [2010] O.J. No. 427), the Ontario Court of Appeal emphasizes that special care must be taken in family law cases,

The adversarial system, through cross-examination and argument, functions to safeguard against injustice. For this reason, the adversarial structure of a proceeding should be maintained whenever possible. Accordingly, the objective of a sanction ought not to be the elimination of the adversary, but rather one that will persuade the adversary to comply with the orders of the court. As this court said at p. 23 of Marcoccia v. Marcoccia 2008 ONCA 866, (2009), 60 R.F.L. (6th) 1 (Ont. C.A.), the remedy of striking pleadings is “a serious one and should only be used in unusual case”. The court also explained at p. 4 that the remedy imposed should not go “beyond that which is necessary to express the court’s disapproval of the conduct in issue.” This is because denying a party the right to participate at trial may lead to factual errors giving rise to any injustice, which will erode confidence in the justice system

[36] As set out by Chappel, J., in “Striking Pleadings in Family Law – Part 1: Introduction and Overriding Principles”, 2019 Docs 3941, the case-law has established the following analytical framework and considerations that apply when dealing with a motion to strike a party’s pleading on the basis of non-compliance with court orders or Rules:

a. First, the judge must be satisfied that there has been non-compliance (Mullin v.Sherlock, 2018 ONCA 1065, at para. 44). At this step, it is critical that the motion judge outline in detail their findings respecting the party’s non-compliance with any relevant orders or Rules (Kovachis v, Kovachis, 2013 ONCA 644).

b. Second, if the court is satisfied that there has been non-compliance, the court must assess the most appropriate remedy based on the particular facts of the case before the court. In undertaking this task, the court should consider and weigh the following factors:

i. The extent and persistence of the non-compliance (Horzempa v. Ablett, 2011 ONCA 633 (C.A.), at para. 7);

ii. Whether the disobedience of the orders and Rules was wilful in nature (Marcoccia, supra, at para. 13; Kovachis, supra at para. 3); Manchanda v. Thethi, 2016 ONCA 909, at para. 9);

iii. Whether the non-compliant party made reasonable efforts to comply and is able to provide acceptable explanations for the breaches (Chiaramente v. Chiarament,e 2013 ONCA 641, at para. 37); Brisson v. Gagnier, 2014 ONCA 909 (C.A.), at para. 3); Marcoccia, supra, at paras. 10-12); Horzempa, supra, at para. 6); Mullin, supra, at para. 45);

iv. Where the non-compliance relates to support orders, the payor's financial circumstances and their ability to pay support (Higgins v. Higgins, 2006 CarswellOnt 5893 (C.A.); and

v. The remedy should be proportionate to the issues in question and the conduct of the non-compliant party (Kovachis, supra, at para. 3); Manchanda, supra, at para. 9; Mullin, supra, at para. 49). It should not go beyond what is necessary to express the court’s disapproval of the conduct in issue (Marcoccia, supra, at para 14); Purcaru, supra, at para.49).

[37] Following the analysis set out in the case law about, and further to my March 4th Endorsement, in this case, I have clearly established that Mr. Hossein Abadi has not complied with five court orders that have been that he produce financial disclosure spanning the period of time from June 30, 2020 to and including March 4, 2021. Contrary to the five disclosure orders made in this proceeding, Mr. Hossein Abadi did not produce the disclosure ordered as follows:

a. He failed to produce any documentation regarding his corporate ownership in Foulath United Corp. in Canada and Foulath United Corp, including such documents such as corporate income tax returns; corporate financial statements; shareholders ledgers; share certificates, and any other necessary documentation to verify his interests in these corporations and the value of such interests as at the date of separation and the current date. He produced on piece of paper identifying that Foulath United Corp. had a bank account at RBC and a credit card;

b. He failed to produce all credit card statements for the past three years for all credit cards he holds in Middle East and worldwide, along with the statements to verify the valuation date figures listed in both sworn financial statements. He did produce credit card statements for his Canadian credit cards. Mr. Hossein Abadi deposes that he has no credit cards in the Middle East. However, Ms. Sherest has attached copies of credit cards Mr. Hossein Abadi did hold in Kuwait, including a Titanium Mastercard and a card for the Commercial Bank in Kuwait;

c. He failed to produce his bank statements for any bank accounts he held in Kuwait or the Middle East. He provided a bank statement from the Gulf Bank which shows a bank account with a negative balance. He deposes that he holds only one Gulf Bank account in Kuwait. However, Ms. Sherest deposes that he had many accounts in the Middle East, including accounts at the Commercial Bank of Kuwait;

d. He failed to produce any documentation to verify the value he places on his financial statement for rugs, silk carpets and jewellery listed at $100,000;

e. He failed to produce bank accounts statements for his TD account #6044687, claiming that he cannot locate records for this account;

f. He failed to produce bank accounts statements for his RBC chequing and savings accounts 5327110 and 50057-72, claiming he is unable to locate records relating to these accounts; and

g. He failed to list an address for the land he owns in Northern Iran, claiming that there is no deed to the land and, therefore, it has no value. He has not produced a single document for this asset demonstrating ownership. He has failed to provide a letter of opinion or appraisal in connection with this property.

[38] As I found in my March 4th Endorsement, Mr. Hossein Abadi has sworn three financial statements in this proceeding, on June 8th, 2018; July 16th, 2020 and January 21st, 2021, respectively. The three sworn financial statements are inconsistent.

[39] Given the inconsistent disclosure and his three sworn financial statements which are entirely inconsistent, it is impossible for Ms. Sherest to advance her property division claims with any certainty. Further, it is impossible for Ms. Sherest to determine what Mr. Hossein Abadi’s true income is for support purposes.

[40] In determining that Mr. Hossein Abadi’s pleadings ought to be struck and that Ms. Sherest may proceed by way of an uncontested trial, I have considered and weighed the following factors:

a. Mr. Hossein Abadi’s non-compliance with the disclosure order has gone on for ten months and required five court attendances by Ms. Sherest, including today’s attendance. Notwithstanding the costs orders made against Mr. Hossein Abadi as a result of his non-compliance, he has not paid the costs to Ms. Sherest;

b. Mr. Hossein Abadi has filed three sworn financial statements in this proceeding, which are inconsistent and do not allow Ms. Sherest to advance her claims;

c. While in my March 4th Endorsement, I held that Mr. Hossein Abadi’s non-compliance has not been wilful because he has been dependent on third parties in Kuwait to assist in the production of this disclosure, which has contributed to his failure to comply with the disclosure orders, I now find that Mr. Hossein Abadi’s failure to take the necessary steps to communicate with the various banks overseas to obtain the necessary financial disclosure has been willful on his part and amounts to bad faith;

d. Mr. Hossein Abadi is the only shareholder of his corporate interests and he has failed to produce even basic disclosure about these companies. He was given specific direction in my March 4th Endorsement as to what he needed to do and yet he made oral submissions today that he has taken no steps to fulfill his obligations under this order;

e. Mr. Hossein Abadi has been self-represented for the most part since the disclosure orders were made. He deposes that he is not working or earning an income. He has demonstrated some effort in providing piecemeal disclosure, however, the disclosure produced has not been helpful and the manner in which it has been produced has increased Ms. Sherest’s legal fees substantially. It is entirely within Mr. Hossein Abadi’s power to obtain the financial disclosure needed to enable Ms. Sherest to advance her case and bring this matter to conclusion, Mr. Hossein Abadi simply has not taken steps to do so.

f. Mr. Hossein Abadi refused to approve the draft order arising from my March 4th Endorsement as to its form and content. Similarly, when he was ordered to pay costs in my Endorsement, dated March 22, 2021, he refused to approve that draft order as to its form and content, making it impossible for Ms. Sherest to have the orders issued and entered by the Court. Further, despite my clear direction in my March 22nd Endorsement that he execute whatever documentation is necessary to have the costs ordered paid out of the proceeds held in trust, Mr. Hossein Abadi refused to sign the Authorization and Direction to the real estate lawyer and for the first time, since March 22, 2021, sent an email to Ms. Sherest’s counsel this morning, the date of today’s court appearance. This means that Mr. Hossein Abadi is aware of his obligation to appear in court when court dates are set. He chooses to participate in the court dates, but chooses not to comply with the court orders made by this Court.

g. Mr. Hossein Abadi’s position throughout has been that he has no money to pay a lawyer and that other than sending an email to the Central Bank of Kuwait and sending an email to the Embassy of Kuwait asking for general assistance to gain access to his bank account statements in Kuwait, he has taken no steps to comply with the disclosure orders. Mr. Hossein Abadi has not written to the specific banks, listing his account numbers, and asked for the bank statements. Nor has Mr. Hossein Abadi attached copies of the Canadian Court Orders asking the various banks and institutions to comply with the said Court Orders. Mr. Hossein Abadi’s submissions to the Court today were “If [Ms. Sherest] can find any money in his name or under his control, he is happy that she take all of it”. In other words, Mr. Hossein Abadi is not prepared to take the steps this Court ordered him to take to correspond with specific banks in Kuwait, including Al-Tijari Bank, Burgen Bank, NBK and Al-Ahli Bank (as I ordered in my March 4th Endorsement), but leaves it to Ms. Sherest to do her best to see what she can find.

[41] All five of the disclosure orders were clear. They set out exactly what steps Mr. Hossein Abadi has had to follow to comply with the disclosure requests. The time frames within which Mr. Hossein Abadi was given to gather and produce the disclosure have also been reasonable. He has now had ten months from the first Order of Hood, J. on June 30, 2020, to obtain the production and produce it. The Court accepted that some of the delay in the production of Mr. Hossein Abadi’s financial disclosure involved assets in the Middle East and in the interest of dealing with the case justly, Mr. Hossein Abadi was given reasonable extensions in time by this Court to obtain the records from Kuwait.

[42] As I indicated in my March 4th Endorsement, the risk of striking Mr. Hossein Abadi’s pleadings in this case, is similar to the risk discussed in Kovachis v. Kovachis, 2013 ONCA 663, namely, that the trial judge will not have all of the necessary and accurate information before him/her to reach a just result. In Kovachis, the Court of Appeal set aside an order striking a party’s pleadings because it was not an “exceptional case” on the evidence before the court. In Kovachis, the Court of Appeal found that there had not been wilful non-disclosure by Mr. Kovachis; and he had provided substantial disclosure. Further, the disclosure that he had not provided was not material or important, so as to trigger the principal of proportionality. In this case, the disclosure that Mr. Abadi has not provided is material to the claims being sought by Ms. Sherest. However, unlike Mr. Kovachis, Mr. Hossein Abadi refuses to provide the financial disclosure that has been ordered and leaves it to Ms. Sherest to try and find what assets may be in his name or under his control.

[43] I am mindful of Rule 2(2) of the FLRs, which provides that the primary objective of the rules is to enable the court to deal with cases justly. Rule 2(3) states that 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.

[44] The most basic obligation in family law proceedings is the duty to disclosure financial information. The requirement is immediate and ongoing: Roberts v. Roberts, 2015 ONCA, 450. As Myers, J. stated in Manchanda v. Thethi, 2016 ONSC 3776, “it has been clear for over 15 years that financial disclosure – early, voluntary and complete financial disclosure – provides the factual foundation for the resolution of financial issues in family law proceedings”.

[45] In this case, Mr. Hossein Abadi has been under an obligation to produce financial disclosure for the past ten months. He has produced some basic disclosure regarding his Canadian bank accounts, but Ms. Sherest has maintained that the bulk of his net worth is Kuwait. Despite the Court setting out exactly what steps Mr. Hossein Abadi was to follow to comply with his financial disclosure obligations he has failed to do so, despite being given four additional opportunities since the first disclosure was made. In these circumstances, I find that there has been deliberate non-disclosure by Mr. Hossein Abadi.

[46] Judges dealing with family law cases are frequently dealing with cases where financial disclosure is not forthcoming despite the fact that financial disclosure is a fundamental aspect of family law and a basic obligation. As stated by Benotto J.A. in Roberts v. Roberts, 2015 ONCA 450, at para. 12, “delinquencies add significant expense to proceedings and consume substantial judicial time and resources. Counsel and their clients should not expect that repeated adjournments and indulgences will be given to instances of non-disclosure. Furthermore, an effective remedy for inadequate or non-disclosure should be available.”

[47] In 2015, Rule 13 of the Family Law Rules was amended to reinforce the parties’ positive obligations to disclose. Rule 13(3.3) sets out various classes of required documents to demonstrate the breadth of financial disclosure required. Moreover, it requires parties to deliver proof that they have applied for some of the required documents which may be in the possession of third parties. The amendments also added a requirement for financial disclosure to be refreshed before case conferences by the filing of a certificate; Manchanda v. Thethi, supra, at para. [15].

[48] Ms. Sherest ought not to have endure order after order, as she has in this case, being ignored by Mr. Hossein Abadi and breached by him. His refusal to disclosure his financial affairs in Kuwait and in the Middle East is a breach of the primary objective of the Family Law Rules (“FLRs”). Despite five court orders having been made, Mr. Hossein Abadi has chosen not to comply with the FLRs. Even at today’s motion, Mr. Hossein Abadi advised the Court that he thought he had until July 21, 2021 to comply with the disclosure because a Settlement Conference/Trial Management Conference has been booked for that date. That statement by Mr. Hossein Abadi, suggests that he is aware of his disclosure obligations and that he could comply with the orders but, for the fifth time, he asks for this Court’s indulgence to give him more time. No further indulgences can be given. Ms. Sherest is entitled to move on with her claims and put this behind her. Allowing Mr. Hossein Abadi to continue to participate in these proceedings may be, what Myers, J. referred to in Manchanda v. Thethi, supra, at para. [53] as “rewarding his thumbing his nose” at Ms. Sherest and at the court’s process.

[49] While my March 4th Endorsement recognizes that the striking of pleadings should be reserved for drastic and extreme cases, Mr. Hossein Abadi has now breached five court orders, as well as ignoring the primary objective of the FLRS, that requires early, voluntary, and complete disclosure without an order even being made. This is an extreme case, in my view. Failing to provide consequences to Mr. Hossein Abadi has been seen by him as permission to continue his course of willful non-disclosure which is inappropriate.

[50] I agree with the sentiments expressed by D.L. Chappell J. in Levely v Levely, 2013 ONSC 1026:

The frequency with which Family Law litigation degenerates into an abusive game of delay tactics, stonewalling, and dodging of judicial authority is a concern which must remain at the forefront of the judge’s mind in considering remedies for a party’s failure to participate as required in court proceedings or to comply with court orders. Family Law litigants who come to the court for assistance must come with a strong sense of assurance that the process will be an effective means of mending and stabilizing the family fabric, rather than a futile money pit of failed justice. The court has a critical responsibility and role to play in ensuring that proceedings which are intended to protect families and lead to resolution of pressing and emotionally divisive issues are not hijacked by a party and transformed into a process for further victimizing the other party and the children in their care. [Emphasis added.] [at para. [12].

[51] Mr. Hossein Abadi has been given many opportunities to rectify his breaches. Costs have been awarded against him and yet, he has not been deterred in his course of non-disclosure. His general statement to the Court today that “he is happy to give Ms. Sherest whatever assets of his that she can find” is indicative of his view that his obligation to produce full and frank financial disclosure is a game of “hide and seek” where he is the one to do the hiding. It is Mr. Hossein Abadi’s obligation to provide the disclosure of the assets in his name and over which he has control, even though assets that are outside of Canada. He refusal to comply with the FLRs and his ongoing breaches of Court Orders, justifies the striking of his pleadings and the matter proceeding without his participation.

Costs

[52] Given my findings that Mr. Hossein Abadi has deliberately breached a number of court orders related to his financial disclosure obligations along with his duty set out in Rule 2(4) of the FLRS, this is an appropriate case where costs ought to be ordered. Ms. Husein seeks costs of $5,000, using a billing rate of $350 per house for today’s attendance. Mr. Hossein Abadi was ordered to pay costs associated with the contempt motion on March 22, 2021. No additional material was filed for today’s attendance. However, costs have been incurred by Ms. Husein having to repeatedly contact Mr. Hossein Abadi and in today’s attendance. In my view, 75% of the costs sought is reasonable, proportionate and within the reasonable expectation of the respondent as to the likely outcome of today’s motion given not only the importance of the issues but also as a result of the many warnings Mr. Hossein Abadi was given by the Court. Accordingly, the respondent shall costs of today’s motion to the applicant in the amount of $3,750, inclusive of HST and disbursements forthwith, to be enforced as a support order by the Family Responsibility Office.

Summary and Conclusion

[53] Accordingly, this Court makes the following order:

a. The respondent’s pleadings shall be struck out.

b. The applicant shall proceed to an uncontested trial. Her trial record shall include a Form 23C affidavit which shall disclose the complete details of the claims she makes and the evidence in support of the relief being sought. The uncontested trial shall proceed during the week of September 13, 2021. The applicant shall be available to appear at the discretion of the judge hearing the uncontested trial.

c. Paragraph [40] of my Costs Endorsement, dated March 22, 2021 shall be amended as follows:

“Accordingly, this Court orders that Ahmed Hossein Abadi shall pay costs of the motion to Zahra Khorami Sherest in the total amount of $13,126.00 to be paid from the net proceeds of sale from the sale of 21 Grand Magazine Street, Toronto, ON, being held in trust by Marssa Giahi.”

d. The applicant shall take out a formal order arising from my March 4th Endorsement, the costs Endorsement, dated March 22, 2021 (as amended by c. above) and this Endorsement without the approval of the respondent as to the form and content of the orders.

e. The combined settlement conference/Trial Management Conference returnable on July 21, 2021 at 10:00 a.m. shall be vacated.

f. The respondent shall pay the applicant costs to today’s motion, fixed in the sum of $3,750, inclusive of HST and disbursements, to be enforced as a support order by the Family Responsibility Office.

April 28, 2021

M. Kraft, J.