Court File and Parties

Court File No.: FS-18-00543 Date: 2022-04-04 Ontario Superior Court of Justice

Between: Marie Fiorellino Di Poce, Applicant – and – John Di Poce, Respondent

Counsel: H. Niman/ M. Maleki, Self-Represented H. Hansen/ J. Robinson, for the Respondent

Heard: February 24, 2022

Before: Shore, J.

Reasons for Decision

Overview

[1] The Applicant brought this motion for an order finding the Respondent in breach of the court orders of Justices Kiteley and Hood, specifically as they relate to disclosure and the timetables. The Applicant is asking the Court to order a financial penalty for each day that the Respondent remains in breach of the orders. The Applicant was also seeking a restraining order against the Respondent and anyone acting on his behalf, including private investigators.

[2] The Respondent’s submits that if there are issues with respect to the timetable or disclosure it is best addressed at a further conference. The Respondent’s response to the motion is that disclosure has been provided, that this motion should be dismissed, and the case sent back to a conference. I disagree.

[3] The parties attended questioning in early 2020. The Respondent gave a number of refusals during his questioning. A long motion, taking place over 2.5 days, was argued before Justice Kiteley in February 2021, culminating in the endorsement dated May 27, 2021: 2021 ONSC 3858. Kiteley J. ordered the production of the Respondent’s refusals. According to the Applicant, the Respondent has still not satisfied a number of the refusals that he was ordered to answer. This is the outstanding disclosure that is the subject of the motion before me.

[4] On November 30, 2021, the parties attended a conference with Justice Hood, acting in his capacity as the case management judge. Another order was made requiring the Respondent to produce the outstanding refusals, as set out in the order of Justice Kiteley, and a timetable was set out for questioning the Respondent on those refusals. The Applicant submits that the Respondent has still not satisfied his refusals, contrary to the court orders, and the questioning could not take place, which caused the entire timetable to be all for nought.

[5] These are the two orders which the Applicant submits have been breached by the Respondent.

[6] For the reasons set out below, I find that the Respondent has breached both the order of Justice Kiteley as well as the order of Justice Hood. The Respondent shall pay $2,500 for each day his disclosure remains outstanding.

[7] While the investigator may be a nuisance, I do not find that the Applicant has reasonable grounds to fear for her safety.

Breach of court orders due to failure to produce refusals:

[8] Justice Kiteley’s May 2021 order was very clear with respect to the disclosure that needed to be provided by the Respondent. I have therefore only briefly addressed each refusal that remains outstanding below:

1. ISN file: The ISN file is the file of the private investigator hired by PricewaterhouseCoopers (PWC) on behalf of the Respondent to follow the Applicant and her children. Kiteley J. ordered the production of the entire file, including the directions and engagement letter. The Respondent previously only provided a copy of the investigator’s report. On February 11, 2022, the Respondent finally produced further documents. These documents refer to documents that have not been produced, such as a letter of engagement, appendices, and a Statement of Work. ISN seemed to indicate they would not release the file without instructions from both the Respondent and PWC. During submissions, counsel for the Respondent advised that the Respondent understands his obligation, and disclosure of the whole file is an issue. However, as of the date of this motion, the entire file had still not been produced. I find the Respondent is in breach of Justice Kiteley’s order in this regard.

2. Bank of Nova Scotia loan: The Respondent was ordered to provide all of the documentation provided to the bank for and related to his loan with the Bank of Nova Scotia. The loan relates to a personal guarantee for a $9.3 million loan to Wallgate Investments Ltd. that shows up as a debt on the Respondent’s financial statement. The Respondent submits that on December 16, 2021 (some 7 months after Justice Kiteley’s order was made) he provided an authorization for the Applicant to access the file. The Respondent submits that the next step is to ask the bank to move faster, but he has taken no steps to follow up with the bank. The Respondent had an obligation to produce the file. The delay is almost entirely his fault. The Respondent has not done what he needed to do to ensure the timely release of the documents. I therefore find he remains in breach of Justice Kiteley’s order in this regard.

3. Mr. Bisceglia’s file: Mr. Bisceglia is the lawyer that acted for the Respondent on the marriage contract. Mr. Bisceglia initially claimed the file was privileged, but Justice Kiteley was clear in her endorsement that privilege had been waived. There had been several drafts of the agreement prior to its execution. None of the drafts were initially produced. The Respondent advised there was nothing else to produce. It was only after this motion material was served that Mr. Bisceglia produced several different drafts of the agreement. Nothing else from the file has been provided. I find the Respondent is in breach of Justice Kiteley’s order in this regard.

4. EquiGenesis Report: The Respondent retained “Mackenzie Lake” to assist in determining the value of his personal tax liability with respect to “Equigenesis,” listed on his sworn financial statement as a $6,535,023 debt on date of separation. The Respondent placed the debt as “TBD” on the date of marriage. The Applicant has not received the report or proof that the report is underway, even though the Respondent advised back on July 7, 2021, that he would be producing a report.

[9] There are four items that remain outstanding in breach of the court orders. The Respondent submits that the outstanding disclosure is not relevant to the material issues in dispute. This motion is not an opportunity for the Respondent to reargue the motion that was before Justice Kiteley (and the subsequent order of Justice Hood). That decision has already been made and an order was made for the disclosure of these documents. Justice Kiteley’s order was clear and unequivocal on the disclosure that was outstanding and was to be provided.

[10] I find the Applicant has met two parts of the three-step process for assessing non-compliance in the context of r. 1(8), which applies where a person fails to obey a court order. The three-step process was set out by Justice Spence in Ferguson v. Charlton, 2008 ONCJ 1 as follows:

(a) Has there been a triggering event? (i.e., non-compliance with a court order)? The answer to this is yes, as set out above.

(b) If there has been a triggering event, is it appropriate to exercise the court’s discretion to not sanction the party’s non-compliance? This discretion will be exercised in “exceptional circumstances,” and ought to take into account the history of the litigation and the conduct of the non-complying party. In this case, I decline to exercise my discretion to not sanction the non-compliance. The reasons will become apparent in the discussion below.

(c) If the court determines that it should not exercise its discretion in favour of the non-complying party, what is the appropriate remedy to impose? I must now turn my attention to this question.

[11] Having found the Respondent in breach of the court orders, the next question is what remedy should be ordered? To simply order what has already been ordered makes no sense. The oft cited comment of Justice Quinn is relevant in this case:

“Court orders are not made as a form of judicial exercise. An order is an order, not a suggestion. Non-compliance must have consequences. One of the reasons that many family proceedings degenerate into an expensive merry-go-round ride is the all-too-common casual approach to compliance with court orders”: Gordon v. Starr, at para. 23.

[12] The Family Law Rules, O. Reg. 114/99, (“FLRs”) provide some guidance:

1(8) If a person fails to obey an order in a case or a related case, the court may deal with the failure by making any order that it considers necessary for a just determination of the matter, including,

(a) an order for costs;

(b) an order dismissing a claim;

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

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

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

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

(g) on motion, a contempt order. O. Reg. 322/13, s. 1.

[13] The Applicant is seeking a fine for every day the disclosure remains outstanding. This remedy is not contained in r. 1(8) of the FLRs. Justice Chappel provided some further guidance on remedies for non-compliance in her decision of Levely v. Levely, 2013 ONSC 1026:

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

The Rules referred to above are the main tools which a judge presiding over Family Law matters has in their toolbox to prevent a party from embarking upon the game of litigation abuse. The scope of these Rules must be interpreted broadly in order to protect the integrity of the court process and the beneficial intention of Family Law proceedings, and to ensure that parties who do respect the court system are able to achieve justice in a timely, affordable and emotionally respectful manner. Judicial response to a party’s failure to respect the court process and court orders should be strong and decisive. The judge should be as creative as necessary in crafting remedies so as to ensure that the non-compliance identified and the resulting damage to the other party are addressed as fully, justly and quickly as possible: 2013 ONSC 1026, at paras. 12-13.

[14] Although this decision predates the FLRs in their current form and content, Justice Moore states that “the observations made by Justice Chappell [sic] ring as true today as they did when [s]he wrote that decision:” Peerenboom v. Peerenboom, 2018 ONSC 5796, at paras. 12-13, aff’d by the Court of Appeal at 2020 ONCA 240.

[15] Fines have been awarded in circumstances similar to the present motion. In Mantella v. Mantella, 2009 ONCA 194, the Court of Appeal quashed an appeal of a trial judge’s order that the Respondent pay a fine in the amount of $2,500 each day until disclosure was complete. The fine was imposed because of the Respondent’s delay in producing documents the court previously ordered to be produced by a certain date.

[16] There have been a number of other cases where fines or monetary payment have been ordered to ensure disclosure: see for example Granofsky v. Lambersky, 2019 ONSC 3251 and Florovski v. Florovski, 2019 ONSC 5013. In Granofsky, at paras. 28, 30-31, Justice Diamond stated that:

In my view, the Court has jurisdiction under the Family Law Rules to order a fine or monetary payment as part of its role to control and enforce its own process … [While it] should be reserved to exceptional and/or egregious circumstances, the respondent has been given opportunity after opportunity to comply with his duty to disclose financial information and documentation and I find the case before me to be a fitting example.

[C]osts orders have been made against the respondent, and while he has complied with those costs orders, their impact has not resulted in compliance with his duty to disclose financial information/documentation.

A daily, monetary penalty payable to the applicant will hopefully have a different impact.

[17] In considering whether to order a penalty and the amount of the penalty, I am drawn to statements and findings already made by Justice Kiteley in these proceedings, including:

1. The Respondent is engaged in “a scorched earth approach” to this litigation: para. 93.

2. “The Respondent has been shown to be unreliable in disclosure:” para. 46 (c).

3. “[T]he evolution of the Respondent’s disclosure is remarkable and an example of how the Respondent must be pressed to provide reliable disclosure:” para. 54.

4. In reviewing the Respondent’s Transcript of Questioning, “There was no aspect of his conduct that could be described as “vulnerable’.” Her Honour stated, “On the contrary, it sets him not to be a reliable witness at trial and in contrast to the Applicant, may not be found credible. He does not need protection:”

5. “Given his repeated insistence that the Applicant owes him an equalization payment, he cannot be relied on to voluntarily provide any documents or information that are inconsistent with his position. He is forced to make such corrections when the Applicant forces him through questioning to respond:” para. 46(c).

6. “The Respondent demonstrated his annoyance with the whole process of questioning. For example, his insistence that a line of questioning was ‘none of your business’ and demanding to know ‘why do you ask that?’ suggests that he will be the gatekeeper of information and he cares not about the legal and factual issues in the case:” para. 46(d).

7. “It is clear that his aggressive approach continues. The submissions on his behalf summarized above make it apparent that he is, if anything, more committed to ensuring that the Applicant suffers a complete defeat in the case:” para. 92.

8. “The Respondent seems not to appreciate that, as a result of the persistence of the Applicant’s lawyers, they have demonstrated an assortment of multi-million-dollar corrections to his net family property statement. The issue of the Bank of Nova Scotia debt referred to above illustrates (a) how difficult it is to get reliable information from him and (b) as reliable information becomes available, how much closer the Applicant is to demonstrating that he has a positive net family property and will owe her millions of dollars in equalization payment. On the merits of her claim as formulated in the Application, namely a claim for an equalization of net family property and spousal support, her claim gets stronger as her legal and professional advisors persist in uncovering inadequacies in his disclosure:” para. 96.

[18] I find this is an appropriate case to order a penalty for each day the disclosure remains outstanding. The parties separated in 2017. This litigation began in February 2018, four years ago. To still be chasing down disclosure after four years, two years after questioning and a year after the motion came before Justice Kiteley, is inexcusable. The Respondent’s approach to this litigation was aptly summarized by Justice Kiteley as set out above.

[19] With respect to quantum, the Respondent’s 2019 income was over $12 million. He has assets of over $100 million. The Respondent previously conceded before the court that he can afford to pay whatever amount of spousal support the court may order. Finances are not an issue for the Respondent. A penalty of at least $2,500 per day is warranted to ensure compliance with the court orders.

Costs:

[20] Under r. 24(1) and r. 1(8), the Applicant is entitled to her costs. The Applicant was successful on the primary issue of non-compliance with the court orders. She was not successful on the issue of the restraining order, but that took up very little space in the affidavits and facta and little time during argument of the motion.

[21] Order to go as follows:

1. The Respondent shall pay the Applicant $2,500 for each day his disclosure under the orders of Justices Kiteley and Hood remains outstanding effective April 1, 2022.

2. If the Respondent’s disclosure remains outstanding on May 1, 2022, the Respondent may bring any motion she deems necessary for further relief from this court, including collection on the payment of the penalties set out herein. As of May 1, 2022, the penalties owing will be $75,000 and climbing.

3. The Applicant’s motion for a restraining order is dismissed.

4. The Applicant is entitled to costs of this motion. If the parties are unable to reach an agreement on the quantum of costs, the Applicant may submit costs submissions on quantum no longer than three pages, plus her bill of costs and offers to settle. The Respondent shall submit his responding costs submissions, also limited to three pages, plus his bill of costs and offers to settle, within ten business days of receipt of the Applicant’s submissions. The Applicant shall have five business days to submit a brief reply, but no more than two pages.

Shore, J. Released: April 4, 2022