COURT FILE NO.: CV-19-615736
DATE: 2022 07 18
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: TERRY ALLEN, IRENE ALLEN, CHRISTOPHER ROBINSON, CRYSTAL ROBINSON, SEAN DELINE, KRISTY ELIK, MAX CAREAU, and ROBIN KUMAR, Plaintiffs
- and -
BRIAN ANISH KUMAR, JOHN DOE, JANE DOE and DOE CORPORATIONS, Defendants
BEFORE: Associate Justice Todd Robinson
COUNSEL: A. Ferguson, for the plaintiffs (moving parties)
W.A. Kyle, for the defendant, Brian Anish Kumar (responding party)
HEARD: February 16, 2022 (by videoconference)
REASONS FOR DECISION
[1] The plaintiffs seek an order striking Brian Kumar’s statement of defence. They move primarily on the basis that Mr. Kumar has failed, if not refused, to pay any portion of the $100,000 costs award previously ordered by O’Brien J. following Mr. Kumar’s unsuccessful motion to set aside the Mareva injunction and Anton Pillar orders obtained by the plaintiffs. The plaintiffs also point to Mr. Kumar’s ongoing non-compliance with court orders and general conduct in this litigation. They argue that his conduct continues to delay progress of this action unjustly and improperly and that it is unfairly driving up their costs, which they submit Mr. Kumar has demonstrated he will not willingly pay.
[2] Mr. Kumar opposes the motion, taking the position that he cannot pay the costs award because he is impecunious and that he has otherwise now complied with his obligations under prior court orders. He argues that his non-disclosure of information and refusals during his examinations are consistent with his right to invoke protections against self-incrimination under the Charter of Rights and Freedoms, the Evidence Act, RSC, 1985, c C-5, and the Evidence Act, RSO 1990, c E.23. In my view, those positions lack merit.
[3] There comes a point in litigation where the court’s tolerance for breaches of court orders and evasion of obligations ends. Striking a defence is not a step taken lightly. However, in my view, Mr. Kumar’s conduct evinces an intention not to submit to the court’s jurisdiction and further demonstrates a level of defiance and obstruction that cannot be condoned. Allowing him to continue to defend this action despite repeated opportunities to comply with court orders, to abide by obligations imposed by those court orders, and to comply with the rules of this court would be doing just that.
[4] I am accordingly granting the plaintiffs’ motion and striking Mr. Kumar’s defence.
Analysis
[5] This motion was originally before me on July 27, 2021, at which time the relief to strike Mr. Kumar’s statement of defence was adjourned on consent to a date to be fixed before me. The balance of the relief in the plaintiffs’ motion has already been addressed.
[6] I previously summarized the nature of the dispute between the parties in my prior decision (2021 ONSC 5529) as follows:
The plaintiffs and Mr. Kumar have been embroiled in this litigation for nearly 1.5 years. It has been heavily contested. The plaintiffs have obtained a sweeping Mareva injunction and Anton Pillar orders to secure Mr. Kumar’s assets, which have been extended on more than one occasion. There has been court-ordered asset disclosure and examinations. There have been numerous opposed motions. The allegations of fraud against Mr. Kumar are serious and unflinching. Mr. Kumar’s opposition to them is equally steadfast.
[7] That summary remains accurate, albeit that more time has passed and disputes between the parties over Mr. Kumar’s compliance with court orders and his litigation obligations have continued.
[8] The plaintiffs seek an order striking Mr. Kumar’s defence under subrules 57.03(2) and rule 60.12 of the Rules of Civil Procedure, RRO 1990, Reg 194 (the “Rules”). Subrule 57.03(2) provides the court with discretion to strike out a party’s defence or make such other order as is just where a party fails to pay the costs of a motion as ordered. Rule 60.12 is to similar effect where a party fails to comply with an interlocutory order. In this case, the plaintiffs point to non-payment of the $100,000 in costs ordered by O’Brien J., coupled with Mr. Kumar’s alleged cavalier attitude to court orders and his obligations in this action, which he continues to ignore.
[9] Mr. Kumar does not dispute that he has failed to pay anything toward the costs ordered by O’Brien J. However, he submits that non-payment is explained by his impecuniosity, which he argues is supported by the financial disclosure and expense logs he has produced in compliance with the Mareva injunction. He acknowledges that he was tardy in producing both tracing of funds and income and expenditure logs, but disagrees with the plaintiffs’ characterization of his conduct as being “cavalier”. He submits that he has made reasonable efforts to comply with the court orders against him in the circumstances and has now complied with them.
Relevant legal framework
[10] Whether to strike a pleading is a discretionary decision. I agree with Mr. Kumar that, since striking a pleading is a severe remedy, I must consider the balance between having claims and defences adjudicated on their merits and ensuring that the administration of justice is not undermined by litigants failing to comply with court orders: Garrett v. Oldfield, 2016 ONCA 424 at para. 2; Hazelton Homes Corporation v. Katebian, 2021 ONSC 1167at para. 6.
[11] In Rana v. Unifund Assurance Company, 2016 ONSC 2502, at para. 50, Dunphy J. reviewed various principles guiding the court’s exercise of discretion under subrule 57.03(2) and rule 60.12. Specifically, he identified eight principles, which I summarize as follows:
(a) The court must be alive to the possibility that non-compliance with court orders is indicative of its process being abused. Failing to act may deprive the moving party of justice according to law and risks rendering the court “a paper tiger”;
(b) A litigant’s right of access to the courts must be accompanied by the responsibility to abide by the Rules and comply with court orders. Exempting impecunious parties from enforcing costs orders may amount to granting “carte blanche” to continue to ignore rules and orders and take unsupportable steps in the action without fear of consequences;
(c) Where a party had the opportunity to make submissions about impecuniosity at the prior hearings leading to the costs order(s), subsequently seeking to relieve against payment of those costs constitutes a collateral attack on the prior orders;
(d) The court may consider a pattern of unnecessary and unreasonable steps taken in the proceeding, including appealing numerous orders without chance of success or knowing the risk of an adverse costs order;
(e) If court orders are cavalierly ignored and if a litigant continuously fails to comply with their obligations as a litigant and then fails to abide by the costs consequences of that behaviour, the court is justified in bringing some finality to the action;
(f) Impecuniosity is not a shield for unreasonable conduct of litigation and a dismissal order may be made even if it resolves the matter on procedural rather than substantive grounds;
(g) Self-represented litigants, while entitled to some accommodation and assistance to ensure a fair hearing, are not entitled to abuse the system or the party opposite. Failure to enforce orders once made against self-represented parties is unfair to the parties opposite and undermines respect for the court and the civil justice system; and
(h) At some point, costs themselves become an inadequate form of compensation for prejudice, especially where the party on whom they are imposed refuses to pay them.
Is Mr. Kumar’s non-payment of costs justified by impecuniosity?
[12] Impecuniosity has been confirmed by the Court of Appeal to be relevant in determining the consequences of a party’s failure to pay a costs order: Tarion Warranty Corporation v. 1486448 Ontario Inc., 2012 ONCA 288 at para. 6. My difficulty with Mr. Kumar’s argument that he is impecunious, though, is that he has not provided financial transparency on this motion or in response to the Mareva orders requiring it. Without that transparency, I cannot accept that Mr. Kumar is impecunious.
[13] Mr. Kumar’s argues that the Mareva injunction and Anton Pillar orders have caused his impecuniosity. He submits that he has no access to any funds to make even a nominal payment against the costs award. However, evidence before me supports that Mr. Kumar opted to lease a luxury vehicle shortly after the costs order was made, currently lives in a multi‐million dollar lakefront home in Burlington on the convenient goodwill of an undisclosed friend, and was eligible for pandemic-related benefits despite his claimed lack of income in 2019 and ongoing lack of employment. In my view, Mr. Kumar has failed to establish impecuniosity and has failed to provide any other meaningful explanation for why payments cannot be made against the costs award.
[14] The initial Mareva order issued by Archibald J. restrained Mr. Kumar from dissipating assets acquired or financed with funds or property, directly or indirectly, from the plaintiffs. It permitted Mr. Kumar to spend up to $5,000 per month on “ordinary living expenses” and up to $10,000 on legal services and representation (para. 3). However, the order also provided that “before spending any money on living or legal expenses, the defendant Kumar must advise the Plaintiffs’ solicitors in writing of the intended source of funds, and provide a monthly expenditure log with receipts and expenditures” (para. 4). Those orders were restated by Faieta J. in his order extending the Mareva injunction. They remain in effect through subsequent extensions of that injunction obtained by the plaintiffs.
[15] Put simply, while Mr. Kumar is entitled to spend up to $5,000 per month on ordinary living expenses and up to $10,000 on legal representation, he cannot do so without full transparency on the source of funds and must provide monthly expenditure logs with receipts. Full disclosure of the source of funds used for his day-to-day living expenses and to pay lawyers is thereby a court-ordered obligation. Nevertheless, despite that court-ordered obligation, Mr. Kumar’s responding materials fail to provide any real explanation for how he is living. In my view, his position has been aptly described by plaintiffs’ counsel as “unexplained welfare.”
[16] With respect to income, Mr. Kumar’s evidence, supported by his 2019 notice of assessment, is that he had no income in 2019. Mr. Kumar has put forward no cogent evidence or explanation for how he lived for a year with no income. When asked on cross-examination if he had received any money from any source in 2019, Mr. Kumar initially queried if the question was “pre-Mareva or post-Mareva”. Only when challenged that it did not matter did Mr. Kumar confirm that his only recollection of receiving money was from “a friend” after he was criminally charged, but that he did not recall the exact details. He refused to identify the “friend”, essentially maintaining a prior refusal.
[17] Mr. Kumar’s evidence is that the sole income he has received since 2019 is the Canada Emergency Response Benefit (CERB), which is relief provided to eligible Canadians during the pandemic, in the amount of approx. $2,000 per month. However, Mr. Kumar did not disclose the fact that he was receiving that benefit until 2021, after this motion was brought.
[18] The fact that Mr. Kumar was receiving CERB payments raises questions about the accuracy of Mr. Kumar’s financial disclosure. I take judicial notice that the eligibility requirements for the CERB (which are publicly available) included that applicants have a minimum employment income of $5,000 in 2019 or the 12 months prior to the date of the application and did not quit their job voluntarily. Mr. Kumar’s evidence is that he was unemployed and had no income in 2019. Mr. Kumar has not explained how he qualified for the CERB when he did not meet two of the eligibility criteria nor has he confirmed what representations he made about his income and employment status in applying for the benefit. Although Mr. Kumar undertook to make best efforts to obtain and produce copies of his applications for the CERB, that undertaking was not answered.
[19] Mr. Kumar was asked and refused questions to confirm if he held any bank accounts in his name anywhere in the world from 2019 to present, to confirm if he has any other bank accounts besides those listed in his prior statutory declaration (which he made in accordance with a prior order), to identify the bank with the account where the CERB payments were deposited, to identify the bank account from which his cell phone bills were paid, to advise if he received funds in 2020 or 2021 from any source not listed in his income and expenditure logs, and to advise of any cash transactions from 2019 to present. In my view, all of Mr. Kumar’s refusals to these questions were improper.
[20] Mr. Kumar justified his refusals by relying on s. 13 of the Charter, s. 5 of the Evidence Act (Canada), and s. 9 of the Evidence Act (Ontario). Those provisions each deal with the right against having incriminating evidence given by a witness in a proceeding used to incriminate that witness in another proceeding. However, none of them assist Mr. Kumar. They do not permit a witness to outright refuse to testify on a potentially self-incriminating subject. Rather, each of them operates to protect a witness who gives incriminating testimony from having that testimony used against them in a subsequent proceeding: R. v. Nedelcu, 2012 SCC 59; ACI Brands Inc. v. Pow, 2014 ONSC 2784.
[21] ACI Brands Inc. v. Pow is a case dealing with self-incriminatory testimony that the plaintiffs submitted after I had reserved my decision. Despite breaching rule 1.09 of the Rules, the case was directly relevant to a fair assessment of Mr. Kumar’s argument and, in my view, it would have been wrong to simply ignore it. I thereby afforded Mr. Kumar an opportunity to submit any additional case law in response to it, without prejudice to addressing the breach of rule 1.09 in costs.
[22] Mr. Kumar ultimately provided brief written submissions with one additional case. In those submissions, Mr. Kumar concedes that he is a compellable witness as discussed in ACI Brands Inc. v. Pow by way of both the judgment debtor examination and cross-examination. However, he points to and relies on the “constitutional exemption” acknowledged by the Court of Appeal as providing full immunity from testifying where the predominant purpose for compelling the witness is to obtain incriminating evidence, rather than evidence in furtherance of the proceeding: Treat America Limited v. Leonidas, 2012 ONCA 748 at para. 45.
[23] Mr. Kumar acknowledges that there is no evidence supporting the constitutional exemption, but submits that the plaintiffs did not seek any relief to compel his answers to refused questions. I fail to see why the plaintiffs are obliged to seek that relief in order to argue the adverse inferences they ask me to draw from the refusals. Mr. Kumar is the party who invoked the Charter, the Evidence Act (Canada), and the Evidence Act (Ontario) as a legitimate basis for refusing questions. The issue before me is whether the refusals were justified at the time such that I should not consider them on this motion, not whether they can be justified by subsequent evidence.
[24] In my view, the constitutional exemption does not apply. The questions asked were not for the predominant purpose of obtaining incriminating evidence. Even ignoring the financial disclosure required by various prior court orders, the plaintiffs conducted an examination in aid of execution of Mr. Kumar under rule 60.18 of the Rules, which they were entitled to do following non-payment of the costs award. Subrule 60.18(2) authorized the plaintiffs to conduct a broad examination of Mr. Kumar in relation to (a) the reason for non-payment of the costs award; (b) his income and property; (c) debts owed to and by him; (d) his disposal of any property either before or after the costs order was made; (e) his present, past and future means to satisfy the costs order; (f) whether he intends to abide by the costs order or has any reason for not doing so; and (g) any other matter pertinent to enforcing the cost order. Judgment debtor examinations entitle the creditor (here, the plaintiffs) to extensive details of the financial circumstances of the non-paying debtor. All of the refused questions were, in my view, proper questions on a judgment debtor examination.
[25] Even if bank accounts were not captured by Mr. Kumar’s financial disclosure obligations under the Mareva orders, when Mr. Kumar failed to pay the costs award, the plaintiffs became entitled to probe what bank accounts Mr. Kumar holds, what money he has received into them and how it has been spent (including how he spent the CERB money he received), his living arrangements, the extent of his living expenses, and how he funds his day-to-day living. That information was also directly relevant to assessing Mr. Kumar’s position on this motion that he is impecunious. There is nothing before me supporting that the plaintiffs genuine motivation in asking the banking-related questions was to incriminate Mr. Kumar, rather than furthering their own enforcement efforts and their opposition to the alleged impecuniosity.
[26] In my view, Mr. Kumar has improperly sought to use the Charter, the Evidence Act (Canada), and the Evidence Act (Ontario) to outright refuse to answer proper questions that should have been answered and that directly bore on disposition of this motion. His answers to those questions and any productions that he may have made would have been protected from use in subsequent proceedings by the deemed undertaking rule (rule 30.1 of the Rules) or, to the extent that the answers are actually incriminating, by the Charter, the Evidence Act (Canada), or the Evidence Act (Ontario). Mr. Kumar’s refusal to produce bank account records and other requested financial information is thereby a factor I have considered.
[27] In addition, expenditure logs produced by Mr. Kumar in response to this motion appear to support a surplus of income after deducting the noted expenses. That surplus has not been accounted for by Mr. Kumar. While the Mareva injunction authorizes maximum monthly living and legal expenses, it does not authorize Mr. Kumar to create savings for future use in the face of other financial obligations in this litigation, such as unpaid costs awards.
[28] Mr. Kumar has also given evidence, as reflected in the expenditure logs, he began leasing a 2016 Mercedes at a cost of $299 every two weeks. That least appears to have been entered with payments commencing after O’Brien J.’s costs order was issued. In my view, even accepting that Mr. Kumar needed a mode of transportation, choosing to lease a luxury car on limited income and in priority to paying a significant costs award contradicts his position on impecuniosity and, frankly, was unreasonable in the overall context of this litigation.
[29] I have also considered a supplementary affidavit sworn after Mr. Kumar’s cross-examination commenced, which I admitted at the hearing. It deals with, in part, a request by Mr. Kumar (through his lawyer) to consent to an order effectively waiving the terms of the Mareva injunction to allow a $25,000 payment to settle a criminal complaint. The affidavit was sworn after adjournment of the cross-examination, contrary to subrule 39.02(2) of the Rules, but I was satisfied that Mr. Kumar’s access (or potential access) to $25,000 was not something that could reasonably have been known to the plaintiffs prior to commencing cross-examination. Since it was relevant to Mr. Kumar’s alleged impecuniosity, I granted leave for the affidavit without prejudice to submissions on the weight to be given to it.
[30] Mr. Kumar submits that the request for consent is irrelevant because the plaintiffs are assuming it means that Mr. Kumar had access to $25,000. He argues that the evidence on this motion supports that he does not. While I agree that the emails and consent order do not expressly confirm that Mr. Kumar had the funds, I do not agree it is irrelevant. Making such a request, particularly with a draft consent order being prepared and sent, would be quite unusual if Mr. Kumar did not have (or anticipate having) access to the $25,000. Although not a significant factor in my decision on impecuniosity, I have considered it.
[31] With respect to the multi-million dollar home where Mr. Kumar has resided since December 2020, his evidence during cross-examination was that he does not own the property, does not know the two registered owners of the property, and is “simply staying in that property through the help of a friend.” That “friend” is said to have access to the property and provided Mr. Kumar with access to the property on a short-term basis until he could secure “a more permanent housing solution.” Mr. Kumar repeatedly refused to identify the friend on the basis that he did not have the consent of his friend to disclose his identity.
[32] A broad Mareva injunction and various Anton Pillar orders have been granted. Mr. Kumar is alleging impecuniosity as a result of those orders. A costs order remains unpaid and a judgment debtor examination was undertaken. The plaintiffs were and are entitled to probe Mr. Kumar’s living arrangements, particularly when his sole explanation for how he is living in a multi-million lakefront home is that an undisclosed “friend”, who is not the owner of the property, somehow has access to it and is allowing him to reside there without any payment toward rent, utilities, or any other expenses, including what are no doubt significant realty taxes.
[33] By advancing impecuniosity as a defence to non-payment of the costs award, Mr. Kumar was obliged to make full and frank disclosure of his assets. That includes answering proper questions about them. Numerous orders for disclosure of Mr. Kumar’s financial information and examination on that disclosure have been made. Refusing to answer questions, to explain his sources of income, and to explain his current living arrangements has obscured a clear picture on Mr. Kumar’s financial situation. I am not prepared to infer impecuniosity solely from the fact of the ongoing Mareva injunction and Anton Pillar orders and cannot find that Mr. Kumar is impecunious when he has clearly not made full and frank disclosure of his financial circumstances.
[34] In context of Mr. Kumar’s ongoing financial non-disclosure, the alleged impecuniosity seems nothing more than a self-serving and convenient response to a motion seeking to strike his defence for non-payment of costs and failure to comply with prior orders. As noted, Mr. Kumar’s position is that the Mareva injunction and Anton Pillar orders have frozen his assets and left him penniless pending disposition of this action. However, that circumstance was the same at the time that O’Brien J. made her costs order. O’Brien J. did not order that costs be payable in the cause or in any event of the cause.
[35] I do not know what, if any, submissions were made about Mr. Kumar’s financial ability to pay costs, but Mr. Kumar was represented for the costs submissions to O’Brien J. by the same counsel before me. Mr. Kumar’s financial circumstances would have appropriate to raise as a factor in assessing costs, or at least in the timing of payment. Even if not raised at the time, following release of the costs endorsement, Mr. Kumar did not pursue an appeal of the costs award or move to vary the timing of payment based on impecuniosity. He did nothing until this motion was brought.
[36] This case has stark similarities to the decision in Apollo Real Estate v. Streambank Funding Inc., 2018 ONSC 392. In that case, the plaintiff was ordered to pay an aggregate of $88,949.55 in costs, but made no efforts to pay them and raised impecuniosity as a defence to the defendant’s motion to stay the action and, if costs were not paid, dismiss it. In granting the motion, Firestone J. (as he was then) specifically noted that conduct by the plaintiff’s principal had led to the high cost awards, that there was no evidence of any attempts to enter into a payment arrangement, that the record made clear that neither the plaintiff nor its principal had any intention of paying the costs, and that evidence put forward in support of alleged impecuniosity was not persuasive (paras. 53 and 58).
[37] Here, a review of O’Brien J.’s costs endorsement makes clear that Mr. Kumar’s conduct was central in her decision to award substantial indemnity costs of $100,000. Mr. Kumar’s own submissions on this motion support that he has no intention of paying the costs award. He admits that he has made no effort to negotiate a payment plan, arguing that he cannot make payment because his assets are frozen, but on the other side of the coin he has refused to make full and frank disclosure of his financial circumstances and bank accounts, including how surplus income is being used.
[38] In my view, the unexplained and unjustified gaps in Mr. Kumar’s financial disclosure, combined with his refusal to produce relevant financial records, supports the plaintiffs’ submission that Mr. Kumar is concealing or diverting funds that could and should be used to make at least some payments against the outstanding, significant costs award.
Has Mr. Kumar failed to comply with court-ordered and procedural obligations?
[39] I have already found that Mr. Kumar has failed to justify non-payment of anything toward O’Brien J.’s costs award. I am further satisfied that Mr. Kumar has also demonstrated an ongoing pattern of non-compliance with court orders and procedural obligations, which is also relevant in my decision to strike his defence.
[40] Prior decisions have commented on Mr. Kumar’s non-compliance with court orders. On this motion before me, it is evident that the mandatory expenditure logs have not been provided on an ongoing basis as required by the Mareva injunction. Mr. Kumar’s excuse for not doing so is essentially being busy instructing his criminal counsel in criminal proceedings and dealing with a criminal trial. I do not accept that as being a reasonable excuse for non-compliance with a significant and ongoing court-ordered obligation throughout 2020 and 2021.
[41] Mr. Kumar also failed to comply with my prior order. At the last case conference before this motion was argued, cross-examination of Mr. Kumar remained to be completed and I ordered that all outstanding cross-examinations on affidavits be completed by December 15, 2021. Mr. Kumar failed to produce himself for cross-examination before that ordered deadline. No acceptable explanation for failing to comply with my order has been provided, and offering to be examined in mid-January, when Mr. Kumar was subsequently available, does not excuse his non-compliance.
[42] The plaintiffs also submit that Mr. Kumar’s failure to comply with his obligations to produce documents (subrule 30.08 (2)) and refusal to answer proper questions (subrule 35.04(4)) further supporting striking his defence. I agree. Non-compliance with the Rules exacerbates Mr. Kumar’s ongoing breaches of and non-compliance with court orders.
[43] I have already discussed Mr. Kumar’s failure to answer proper questions during his various examinations, which in my view obstructed the plaintiffs’ examinations.
[44] I am also satisfied that Mr. Kumar has not complied with his production obligations. Notably, in response to this motion, Mr. Kumar produced various Interac e-transfer records printed in November 2018 and wire transfer details from a $5,000 transfer in May 2018. Production orders were made by both Sanfilippo J. on September 9, 2019 and Kimmel J. dated December 5, 2019, which required Mr. Kumar to produce affidavits of documents disclosing all relevant documents. Kimmel J. ordered a deadline of January 5, 2020 for a further and better affidavit of documents.
[45] Subrule 30.03(1) of the Rules expressly requires that affidavits of documents disclose “to the full extent of the party’s knowledge, information and belief all documents relevant to any matter in issue in the action that are or have been in the party’s possession, control or power.” Subrule 30.03(2) requires that the affidavit include all documents that are or were in the party’s possession, control or power and, if privilege is claimed over a document, the grounds for the claim.
[46] Similar to his position for why expenditure logs were not produced during 2020 and 2021, Mr. Kumar’s evidence for why documents at Exhibit “G” to his affidavit were not produced earlier is that he was focused on his criminal trial and criminal matters until April 2021. He states that, after April 2021, he was able to review the documentation “in the custody” of his lawyer. Mr. Kumar submits that he has an ongoing obligation for disclosure and that producing relevant documents that have now come to his attention is consistent with that obligation.
[47] Mr. Kumar is correct that civil litigants have ongoing production obligations, but this is not a situation where Mr. Kumar diligently reviewed his records and only subsequently located documents that reasonably could not have been located beforehand. In my view, Mr. Kumar’s cross-examination evidence on locating the documents is more consistent with failing to conduct a thorough review of records, despite the court orders and his obligations under the Rules. The form of affidavit of documents required him to swear that he had no additional relevant records in his possession, control or power. No satisfactory explanation has been given for why the clearly relevant documents at Exhibit “G” to his affidavit were not previously produced.
[48] I agree with the plaintiffs that, based on the record before me, Mr. Kumar has been and continues to be choosing to comply with his obligations when it is convenient in the litigation for him to do so. The evidence before me on this motion has raised serious doubts about whether Mr. Kumar has, in fact, produced all relevant documents as he is obliged to have done by the Rules and was previously ordered to do.
[49] The right to have a matter decided on its merits does not trump the obligation to comply with court orders and procedural court rules. In civil litigation, they exist in a balance. I agree with the plaintiffs’ submission that Mr. Kumar’s refusal to provide full and frank financial disclosure (as clearly required by several prior court orders and to which the plaintiffs are entitled under subrule 60.18(2)), ongoing failure to abide by the terms of court orders, and ongoing failure to comply with obligations under the Rules cannot be condoned and, further, is resulting in ongoing, undue, and unfair expenses to the plaintiffs.
[50] In my view, this is a case where permitting Mr. Kumar to continue his pattern of non-compliance and obstruction is contrary to the fair and proper administration of justice and the integrity of our justice system. The “severe” remedy of striking Mr. Kumar’s defence is warranted and appropriate.
Should an opportunity be given to cure the default?
[51] Mr. Kumar submits that striking a pleading should not be a remedy of first resort and that, if I am inclined to strike his pleading, then (as in many of the cases put before me) he should first be afforded an opportunity to remedy his default by, for example, permitting him to make monthly payments against the outstanding costs award.
[52] Case law before me does support Mr. Kumar’s position that striking out a defence generally ought not to be the remedy of first resort, and that the defaulting defendant should first be provided with an opportunity to cure their defaults: Bell ExpressVu Limited Partnership v. Corkery, 2009 ONCA 85 at para. 35; Son v. Khan, 2018 ONSC 284 at para. 85. Nevertheless, there is no hard-and-fast rule that litigants who fail or refuse to comply with court orders will always get a “last chance” before their pleading is struck. In my view, such a rule would be contrary to the proper administration of justice. It would imply that litigants may breach court orders with impunity pending the opposing party moving to strike, and that non-compliance with court orders prior to such a motion deserves nothing more than a slap on the wrist.
[53] The plaintiffs point to the decision in BRIM IPCO Inc. v. Horbatiuk, 2019 ONSC 878, in which Emery J. held that additional time for the plaintiff in that case to pay outstanding costs awards in favour of certain defendants would unlikely make any difference in the plaintiff’s willingness or ability to pay the costs, such that dismissal of the action against the defendants was warranted (para. 41). The same is true here. Based on Mr. Kumar’s position and submissions, providing him with an opportunity to pay the costs will make no difference. He evinced no intention to pay the costs at any point between release of O’Brien J.’s endorsement and this motion being argued, including during the nearly seven-month period of adjournment from the original return of the motion.
[54] In my view, Mr. Kumar’s conduct in this litigation is also distinguishable from much of the case law before me. The matters raised and argued on this motion ought not to come as a surprise to Mr. Kumar. I am not the first judicial official to comment on his non-compliance with prior court orders. Mr. Kumar has been afforded ample opportunity to comply with his obligations, yet has not done so. In the particular circumstances of this case, the fact that there has been no prior court order giving him a final chance to pay the costs or otherwise comply with prior court orders is, in my view, immaterial.
[55] Financial non-disclosure has been an ongoing theme in this litigation for some time. Notably, O’Brien J. specifically commented on Mr. Kumar’s failure to provide financial transparency at para. 7 of her costs endorsement. It was a factor in her decision to award substantial indemnity costs. As already discussed, the record before me also supports that Mr. Kumar failed to comply with his ongoing obligation in the Mareva orders to produce income and expenditure logs, which were only finally produced in response to this motion accompanied by what I view as a weak explanation for Mr. Kumar’s non-compliance throughout 2020 and 2021.
[56] Mr. Kumar is formally self-represented. However, while he may be choosing to represent himself out of court, he evidently has access to legal advice and has been represented by a lawyer at every significant court hearing. Mr. Kumar is not the type of self-represented litigant discussed in the case law put before me.
[57] Mr. Kumar’s position is, essentially, that he should be given another chance despite ongoing non-payment of the costs award and prior non-compliance with court orders because the case should be tried on its merits. However, despite making submissions on the merits of his pleaded defences, Mr. Kumar has put forward no evidence on this motion supporting that his defences are meritorious. His responding affidavit deals only with compliance with undertakings, expense logs for July 2020 to August 2021, his notices of assessment for 2019 and 2020, and his position on impecuniosity and why the costs award has not been paid.
[58] Conversely, this is a case where the plaintiffs have satisfied more than one judge that there is a strong prima facie case of fraud. O’Brien J. specifically observed that in her costs decision at para. 6, where she held as follows:
Substantial indemnity costs are appropriate in the circumstances of this case. First, from the outset of the motions brought by the Plaintiff, Archibald, J. found that a strong prima facie case of fraud had been made out. In spite of requiring the Plaintiffs to attend multiple further court appearances, Mr. Kumar did not put forward evidence to dispel the strong prima facie case. Indeed, if anything, the case against Mr. Kumar became stronger over time. As discussed in my Endorsement, the evidence of Mr. Kumar’s ex-spouse, Kim Beattie, did not correspond with Mr. Kumar’s defence, Mr. Kumar was not able to explain what has happened to the Plaintiffs’ funds, and Mr. Kumar did not file any evidence in response to the Plaintiffs’ tracing of their funds.
[59] There is nothing on the record before me supporting that Mr. Kumar has meritorious defences that should be weighed more heavily on this motion than his pattern of non-compliance. At best, merits is a neutral factor on this motion.
[60] Not all defendants who fail to comply with court orders should be given further chances. In my view, Mr. Kumar has had ample opportunity to take his obligations as a litigant seriously, but has not done so. His explanations for non-compliance with his obligations under the Mareva orders are weak. He asks the court to excuse his failure to make any payments toward the substantial costs award because he is impecunious, yet he has not made full and frank disclosure of his assets and has obstructed the plaintiffs from meaningfully probing them.
[61] For these reasons, I find no basis to make a conditional or delayed order striking Mr. Kumar’s defence. I am satisfied that doing so will make no difference.
Disposition
[62] For the reasons outlined above, I order that Mr. Kumar’s statement of defence is hereby struck, with prejudice.
Costs
[63] Costs outlines have been exchanged and submitted. If the parties cannot agree on costs of this motion, then written costs submissions shall be exchanged. The plaintiffs shall serve any costs submissions by August 3, 2022. The plaintiffs shall serve their responding costs submissions by August 19, 2022. There shall be no reply submissions absent leave of the court. Costs submissions shall not exceed four (4) pages, excluding any offers to settle and case law, and shall be submitted by email directly to my Assistant Trial Coordinator, Christine Meditskos, with proof of service.
[64] Unless costs submissions are exchanged and filed in accordance with the above, the parties shall be deemed to have agreed on costs.
ASSOCIATE JUSTICE TODD ROBINSON
DATE: July 18, 2022