NEWMARKET COURT FILE NO.: FC-03-16371-05

DATE: 20220518

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Laura Ronco Graci

S.L. Bruce, Counsel for the Applicant

Applicant

– and –

Benedetto Graci

Respondent

J. Persaud, Counsel for the Respondent

HEARD: May 17, 2022

RULING ON MOTION

A. Himel J.

Relief Sought and Background

[1] The Applicant (“wife”) brings a motion dismissing the Respondent’s (“husband”) Motion to Change as a result of the nonpayment of costs, the failure to pay the required sum of $100,000, and the failure to pay the arrears in excess of $800,000. She also seeks orders that the husband be required to pay an additional amount of support arrears as a condition precedent before taking any further steps before the Court.

[2] The parties were married in 1996 and separated in 2003. There are two children of the marriage who continue to qualify for child support. The father has made no voluntary payments of child support or spousal support since at least the final order of Rogers J. dated June 27, 2007 (“the Rogers Order”). The father was ordered to pay the sum of $1,448 per month in child support and $3,000 in spousal support, based on an imputed income to the father of $120,000. These amounts were derived from the temporary order of Perkins J. dated November 12, 2003. Neither of the orders were appealed.

[3] The husband brought a Motion to Change the Rogers Order. It was dismissed by MacIsaac J. on June 1, 2010 (“ the MacIsaac Order”) on the basis that the husband demonstrated no material change in circumstances and that his case was based on the Rogers Order being incorrect.

[4] The husband was not permitted to bring any further Motions to Change unless he paid at least $100,000 in support arrears, which were, at that time, approximately $250,000. The father has failed to make any significant payments to the arrears, and he failed to pay costs in the amount of $7,077.48.

[5] In 2017, the husband was granted leave to commence the current Motion to Change. The wife failed to respond to the 14B requesting leave that was heard by Bennett J. (which she states she did not receive same for many months). The wife subsequently objected to the granting of leave to bring the Motion to Change in the absence of the required payment of $100,000. Bennett J. case managed the file from 2017 to relatively recently.

[6] No motion to set aside the granting of leave, or to dismiss the Motion to Change on the basis of the breach of the MacIsaac Order was heard by the Court.

[7] During the TSEF Conference on May 13, 2022, Macpherson J. directed that a summary judgment motion (which the parties understood to mean a motion to dismiss the husband’s Motion to Change) be heard in advance of the matter being set down for a hearing on its merits.

[8] That motion was heard by me this day.

Law and Analysis

[9] Pursuant to Rule 1(8) of the Family Law Rules, O. Reg. 114/99, as am, the court has wide discretion in dealing with a party’s failure to obey an Order. The section reads as follows:

Failure to Obey Order

(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.

[10] The three-pronged test governing the exercise of judicial discretion to strike a party’s pleadings/dismiss a party’s case is well established in the caselaw:

(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? [^1]

The Triggering Event: The Breaches and Justifications

[11] The wife summarizes the husband’s breaches of the Court orders as follows:

(a) he has not paid in excess of $800,000 in arrears;

(b) he has not paid the sum of $100,000 which was a precondition to a Motion to Change being brought;

(c) he has not paid the sum of $7,708 of costs arising from the MacIsaac Order; and

(d) he has failed to provide meaningful financial disclosure, stating that he has no bank accounts, credit card statements or other financial disclosure.

[12] The husband does not deny that he failed to pay the amounts set out above. He states that he simply cannot afford to pay same.

[13] However, the husband is a hairdresser who admits that he has been working. Yet, he has failed to make any payments voluntarily since at least 2007.

[14] The husband also admits that he has a new child and a new wife, both of whom he supports as the wife has a nominal income.

[15] The husband relies on the fact that Bennett J. permitted the matter to proceed to various conferences in order to justify the breaches of the above orders. However, I find that the obligation to make the required payments of $100,000 and costs, which were final orders, could not and were not varied by Bennett J. when he permitted the husband to participate in conferences in respect of the Motion to Change.

[16] The obligation to pay the required amounts ought to have been met at some point since the matter commenced in 2017. The MacIsaac Order continues in full force and effect. It has been breached and there is no justification for same.

The Appropriateness of the Remedy of Dismissing the Father’s Motion to Change/Striking his Pleadings

[17] As stated in Manchanda v. Thethi, 2016 ONSC 3776, 2016 CarswellOnt 8951 (S.C.J.) “Without enforcement of the primary objective, a party can frustrate the civil justice system’s goals of efficiency, affordability, proportionality, and fairness, by making the process slow, expensive, and distressful.” The Court of Appeal held that striking of pleadings is not reserved for drastic and extreme cases.” (2016 ONCA 909).

[18] In Lamothe v. Ellis, the court struck the Respondent’s pleadings due to his chronic and persistent disregard of court orders. Chozik J. considered the following five factors in determining whether it was appropriate to strike the Respondent’s pleadings:

(a) That the Respondent's non-compliance is extensive and persistent;

(b) That his non-compliance is willful in nature;

(c) That the Respondent has not made any reasonable efforts to comply with the court orders and is unable to provide acceptable explanations for the breaches;

(d) That in claiming that he is financially unable to pay the costs awards and minimal child support, the Respondent has not provided adequate financial disclosure to the Applicant or the underlying documentations that would allow her (and the court) to make adequate determinations as to his income and employment; and

(e) That the remedy must not go beyond that which is necessary to express the court's disapproval of the conduct in issue and must be proportionate to the issues in question and the conduct of the Respondent.[^2]

[19] In the present case, each of the factors identified by Chozik J. in Lamothe v. Ellis apply:

(a) the husband’s non-compliance is extensive and persistent. He has made no voluntary payments since at least 2007;

(b) the husband’s non-compliance can only be described as flagrant, wilful and calculated. He has chosen to start a new family and ignore his obligations to the wife and these two children;

(c) the husband’s decision to decline to open any bank accounts for fear that the FRO will take any available funds is egregious. He seems to be critical of the FRO for taking the steps they are obliged to take. In this case this includes incarceration yet the husband continues to avoid paying any child or spousal support;

(d) the lack of financial disclosure on the basis that the husband has no assets and an undisclosed (and perhaps cash income) is unacceptable and frankly, not credible; and

(e) this is now the second attempt at a Motion to Change. The first failed in 2010. The current case commenced in 2017. The wife and children need the litigation to come to an end.

Another Remedy that Might Suffice

[20] The husband states that he should not have his Motion to Change dismissed if there is another remedy that might suffice. When asked, he provided no other alternate remedy.

[21] The wife states that the only remedy that might suffice other than dismissing the husband’s claim is to require the payment of a significant amount of funds that are owed. I agree.

[22] If the husband wishes to avoid his Motion to Change being dismissed he can avoid same by making the required payment of $100,000, the costs of $7,708.78 and today’s costs of $17,000. He must also serve and file additional disclosure as per Schedule “A” below. Since the next trial sittings take place in November 2022, I am providing the husband with 60 days to make the required payments and to provide financial disclosure.

[23] The wife may proceed with a draft order by 14B to my attention dismissing the father’s Motion to Change anytime on or after 61 days from today. The husband will have his Motion to Change dismissed, without notice.

Costs

[24] The wife has expended considerable funds to respond to the Motion to Change. She continues to wait for the court-ordered sums to be paid.

[25] In determining an appropriate award that the unsuccessful party should pay, the court is mindful that it must be fair and reasonable and that the costs need to be proportional to the issues and amounts in question as well as the outcome of the case. Amounts actually incurred by the successful litigant are not determinative. Rule 24(12) prescribes the factors which the court shall consider in deciding the appropriate quantum of costs as follows:

24 (12) In setting the amount of costs, the courts shall consider,

a) the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues:

(i) each party’s behaviour,

(ii) the time spent by each party,

(iii) any written offers to settle, including offers that do not meet the requirements of rule 18,

(iv) any legal fees, including the number of lawyers and their rates,

(v) any expert witness fees, including the number of experts and their rates,

(vi) any other expenses properly paid or payable; and

b) any other relevant matter.

[26] In setting the amount of costs, Rule 24(12) requires the court to consider the reasonableness and proportionality of each enumerated factor as it relates to the importance and complexity of the issues. Assessing costs is “not simply a mechanical exercise.”[^3] The Court retains discretion to make costs awards that are fair, proportional, and reasonable in all the circumstances.[^4]

[27] The wife has been effectively wholly successful on this motion. Either the husband’s Motion to Change will be dismissed or she will receive the funds that were ordered to be paid by MacIsaac J. in 2010. I note that the wife has undoubtedly experienced stress dealing with this case since 2017. Full indemnity costs are warranted in the circumstances of this case.

[28] The father’s counsel (who incurred costs of $10,000 to prepare for this motion alone), acknowledges that the wife’s request for costs of approximately $17,000 (from 2018 to present) is reasonable. This amount is proportionate to the work completed, the counsel’s level of experience and the significance of this motion to the parties.

Order to go as follows:

1. The Respondent’s pleadings in respect of all financial issues are hereby struck out as of 61 days from today, unless the husband complies with paragraph 2 below.

2. The Respondent shall pay the sum of $100,000, $7,708.78 and $17,000 within 60 days. He shall provide the financial disclosure set out in schedule “A” below.

3. The Respondent may not commence any new Motion to Change until the terms of paragraph 2 above have been met, and only with leave of the court by 14B which shall be served upon the Applicant (or her counsel with consent) by email or registered mail.

4. If the Respondent complies with paragraph 2 above, either party may arrange a TSEF Conference. A new TSEF is required. Evidence in-chief will be primarily by affidavit. No evidence shall be rendered that pre-dates June 1, 2010, which is the start date for any change to the support. I estimate the Motion to Change be heard within two to three days. The parties cannot afford a longer hearing, such a hearing is not proportionate to the case, and the court’s limited resources must be shared equitably amongst litigants. The next trial sittings shall take place in November 2022. The matter is vacated from the May 2022 trial sittings and adjourned to the November sittings.

5. If the Respondent complies with paragraph 2 above, the Applicant shall serve a new sworn Financial Statement, 2010 to 2021 ITR and NOA, 2022 year-to-date income and any outstanding disclosure, within 30 days of receipt of the payments.

Justice A. Himel

Date: May 18, 2022

Schedule “A”

The Respondent Husband shall provide the following disclosure, unless otherwise provided to date. Where the documentation is not available he shall explain in a 14A affidavit: why the documentation is not available, and how he has supported himself, his new wife and the child from 2010 to present.

1. New sworn Financial Statement with income information for the

husband and his wife.

2. Receipts or other evidence of amounts received for haircutting for at least two years. 2021 year end income and 2022 year to date income. Three current consecutive pay stubs/statements of earnings.

3. Copy of the husband’s passports from 2010 to present with all travel pages provided.

4. All government benefits (CERB, EI, OW...) received from 2010 to present.

5. The following documents as proof of income from 2010 to present:

☐ All sole, joint or held in a third party’s name but used by the husband: credit cards, bank/investment accounts, leases, mortgage, car lease.

☐ A copy of every personal Income Tax Return with all schedules, attachments and information slips, filed with the Canada Revenue Agency.

☐ If personal Income Tax Returns have not been filed with the Canada Revenue Agency, a copy of all income slips (T4s, T4As, T5s, etc.). ☐ Notices of Assessment and, if any, Notices of Reassessment; or,

☐ Where Notices of Assessment are Reassessment are not available, a copy of the Income and Deductions printout provided by the Canada Revenue Agency (To obtain this information, contact customer service at 1-800-959-8281).

☐ A copy of any application made by or for the party within the last three years for a loan, line of credit, credit card or mortgage, including any statement of income or net worth provided by or for the party.

If the husband is/was a party who is self-employed or has an interest in a business, including a sole proprietorship, a partnership or a corporation from 2010 to present:

The following documents from any business in which the party has an interest since 2010.

[ ] Year-end Financial Statements for all businesses in which the party has an interest, including income and expense statements and lists of assets, liabilities and debts.

[ ] A statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, the party or persons or corporations with whom the party does not deal at arm’s length.

[ ] The most recent monthly or quarterly income and expense statements.

[ ] A copy of any application made by or for the business for a loan, line of credit, credit card or mortgage, including any statement of income or net worth provided by or for the business.

[ ] A copy of any partnership agreement involving the party.

[ ] Confirmation of the party’s income and draw from, and capital in, any partnership.

For the husband’s 2009 bankruptcy:

[ ] Proof of bankruptcy, including copy of assignment in bankruptcy or petition into bankruptcy, statement of affairs, and any discharge.

[ ] A copy of any bankruptcy proposal signed by the party and the trustee under the Bankruptcy and Insolvency Act.

[ ] A copy of the projected cash flow statement of the party, signed by the party and filed by the trustee along with the final proposal.

[ ] A copy of the trustee’s cash flow statement, the trustee’s report on reasonableness of cash flow statement and trustee’s report containing prescribed representations of the insolvent party regarding the preparation of the cash flow statement.

[ ] A copy of the trustee’s Income Tax Return.

[^1]: Lamothe v. Ellis, 2021 ONSC 4883, at para 25. [^2]: Lamothe v. Ellis, 2021 ONSC 4883, at para 42. [^3]: Delellis v. Delellis, 2005 36447 (ON SC), [2005] O.J. No. 4345. [^4]: M. (C.A.) v. M. (D.), (2003) 2003 18880 (ON CA), 67 O.R. (3d) 181 (Ont. C.A.).