COURT FILE NO.: FC-19-586
DATE: 2022/06/14
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
H.G.
Applicant
– and –
J.R.N
Respondent
William R. Clayton, for the Applicant
Scott Grainger, for the Respondent
HEARD: Heard May 4, 2022
The honourable justice d.j. gordon
REASONS FOR DECISION
[1] This is a motion to amend pleadings.
Background
[2] The original claims in this action included parenting of a seven-year-old child, child support, property and a restraining order. Prior to trial, the parties resolved the parenting issue and a consent order as granted on April 13, 2022 in this regard, at the commencement of trial.
[3] The evidentiary portion of the trial required nine days, ending on April 28, 2022. Submissions from counsel were received on April 29 and May 4, 2022. During these submissions, counsel for J.R.N. presented a motion to amend the answer.
Motion
[4] In her answer, J.R.N. sought an order for child support imputing an income of $60,000.00 to H.G. Prior to final submissions, Mr. Grainger provided a draft Order which included a term imputing an income of $90,000.00 to H.G. After submissions were received from Mr. Grainger on the child support issue on April 29, 2022, I directed him to the inconsistency between his client’s answer and the draft Order. The motion to amend the answer was presented on the second day for submissions.
Positions
[5] The basis for the amendment, according to Mr. Grainger, is to address undisclosed income of H.G. as follows:
(a) commission income earned in 2019 by a company, in which H.G. and his brother are equal shareholders, in the amount of $16,653.00;
(b) commission income earned by H.G. in 2020 of $48,000.00 USD and $40,000.00 USD, being $118,000.00 CAD in total; and
(c) profit on the sale of construction equipment by H.G. in 2021 of $22,000.00.
[6] The commission income in (a) and (b) above, Mr. Grainger submits, was discovered during questioning on February 16, 2021, such not having been disclosed in the prior financial statements of H.G. The profit in (c) above, he adds, was not particularized in the subsequent financial statements of H.G. and was only fully disclosed in the income brief served by Mr. Clayton prior to trial.
[7] In opposing this motion, Mr. Clayton argues J.R.N and Mr. Grainger were well aware of the income of H.G. by March 2021 but took no steps to amend the answer. At this late stage of the case, he says, it is too late to amend, that neither costs nor adjournment can address the disadvantage to his client.
[8] In response to my inquiry, Mr. Clayton reported he only received formal notice of the higher imputed income being sought upon receipt of the draft Order from Mr. Grainger prior to final submissions. He also acknowledged there was informal notice of a higher number in discussions between counsel prior to trial; however, Mr. Grainger did not then pursue an amendment.
Evidence
[9] In support of the motion to amend, a law clerk in the employ of Mr. Grainger, provided an affidavit, sworn May 2, 2022. While it provides evidentiary background, in general, the affidavit incorrectly suggests the income disclosure was only fully presented at trial. I prefer to address the documentary record on this issue.
[10] H.G. provided four financial statements during this litigation. In his financial statement, sworn October 2, 2019, he reported a 2018 income of $18,235.00, current or projected employment income of $36,000.00 and a bank account balance of $20.00. In the second financial statement, sworn July 13, 2020, H.G. reported a 2019 income of $24,154.00, current or projected self-employment income as a sole proprietor in the same amount and a bank account balance of $51,977.96.
[11] The first day of questioning occurred on February 16, 2021. The bank account was of particular interest to Mr. Grainger. During this questioning, H.G. reported:
(a) $10,000.00 commission payment received in 2019 through his bother’s company (the total amount received by the company as revealed at trial was $16,635.00);
(b) $48,000.00 USD, or $66,000.00 CAD, commission received in 2020; and
(c) $40,000.00 USD, or $52,000.00 CAD, commission received in 2020.
[12] The commissions result from the work of H.G. as a broker in the sale of used construction equipment. H.G. has been involved for some years in attempting to broker sales, the above transactions being his only success.
[13] H.G. served a third financial statement, sworn March 4, 2021, several weeks after questioning. As to 2020 income and current or projected commission and self-employment income he wrote “TBD – see note below”. The note says:
Note: my gross self-employment income, which includes unusual commission income in excess of $100,000.00 was $161,350.08. I have not yet filed my 2020 Income Tax Return and until that time, I am unable to determine my net self-employment income was for 2020. 2020 was an unusual year that I was able to earn substantial commissions for selling two pieces of large equipment. This was most unusual. My annual income for 2019 was $24,154.00 (net business income) is more typical of my annual income.
[14] H.G. went on in this document to indicate the current or projected 2021 income was $5,412.00 and the bank account balance of $67,548.52.
[15] The second day of questioning took place on August 18, 2021. On this occasion, H.G. reported the sale of an excavator earlier that year for a profit of $20,000.00 and as reported in his income tax return (there shown as a capital gain of $22,000.00, taxable capital gain of $11,000.00, and recapture of $3,164.00).
[16] The fourth financial statement was sown on March 30, 2022, prior to trial. H.G. reported a 2021 income of $3,670.77, current or projected self-employment income, child tax benefits and other income totalling $5,567.76 and a bank account balance of $6,912.04.
[17] H.G. had previously provided all of his income tax returns.
[18] It appears the commission income was used to pay the litigation expense for this trial as well as personal living expenses given the modest self-employment income.
Principles
[19] Rule 11(3), Family Law Rules, provides:
(3) AMENDING APPLICATION OR ANSWER WITH COURT’S PERMISSION – On motion, the court shall give permission to a party to amend an application, answer or reply, unless the amendment would disadvantage another party in a way for which costs or an adjournment could not compensate.
[20] The starting point is to recognize that pleadings are the foundation for every case. It is fundamental to the litigation process that lawsuits be decided within the boundaries of the pleadings. See: Rodaro v. Royal Bank of Canada (2002), 2002 CanLII 41834 (ON CA), 59 O.R. (3d) 74 (Ont. C.A.).
[21] Leave to amend pleadings is discretionary relief. Rule 11(3) refers to disadvantage to the other party, or prejudice, that cannot be compensated by costs or an adjournment.
[22] In Greenglass v. Greenglass (2009), 2009 CanLII 39995 (ON SC), 74 R.F.L. (6th) 320 (Ont. SCJ), aff.d (2010), 2010 ONCA 675, 99 R.F.L. (6th) 271 (Ont. C.A.), Allen, J. dismissed a motion at the commencement of trial, to amend a pleading seeking an unequal division of net family property. The motion was considered to be a last-minute request in a case commenced in 2002, with prejudice to the other party by not having the opportunity to prepare and resultant delay by an adjournment with possible further steps required. The moving party had been aware of the matter involving the proposed claim for some years but did not seek an amendment in a timely manner. At para. 11, Allen commented on the entitlement of litigants to know in advance the case they have to meet through knowledge of the particular pleadings of the other party.
[23] In Mio v. Mio (2014), 45 R.F.L. (7th) 374 (Ont. SCJ), Pazaratz, J. dismissed a similar last- minute motion to amend a pleading to claim retroactive child support. The motion to change, commenced in October 2012, had been scheduled for a two-day hearing at the sittings in March 2014. The motion to amend was heard on March 28, 2014, during the sittings. The reason for the delay was said to be “oversight”.
[24] Pazaratz J., at para. 19, identified a two-step process under Rule 11(3):
(a) Is there a disadvantage?
(b) If so, can it be compensated by costs or an adjournment?
[25] An adjournment would have resulted from granting the motion. However, at para.s 20-35, he identified a number of reasons to deny the request to amend. Disadvantage was found, the responding party not having addressed the proposed claim by evidence or in the factum. He was also denied the opportunity to test the proposed evidence. An adjournment would have caused further delay, necessitating additional steps in the case.
Analysis
[26] H.G. did not provide full disclosure in his initial financial statements. Most of the income evidence was revealed in questioning in February 2021. A further financial statement in March 2021, completed the disclosure to that point. The final piece of income information was provided in August 2021. The evidence at trial differed only in one minor respect, namely, the commission earned through the brother’s company was in the total amount of $16,653.00, H.G. saying he only received $10,000.00.
[27] In result, it is clear J.R.N. and Mr. Grainger had substantial financial information from H.G. by March 2021, complete by August 2021. Yet no motion to amend was presented in a timely manner. Perhaps this was an “oversight”.
[28] Disadvantage at this late stage is obvious. The evidentiary portion of this trial was presented within the framework of the pleadings. Mr. Clayton had received some informal notice, but nothing followed. The trial proceeded. It is now too late to adjourn, nor can any cost award compensate. An amendment during final submissions would only be considered in exceptional circumstances and where the opposing party is well aware, prior to trial, of the specific change in position. That is not the case here. The motion to amend is dismissed.
Gordon, J.
Released: June 14, 2022
COURT FILE NO.: FC-19-586
DATE: 2022/06/14
ONTARIO
SUPERIOR COURT OF JUSTICE
H.G.
Applicant
– and –
J.R.N
Respondent
– and –
REASONS FOR DECISION
Gordon, J
Released: June 14, 2022