COURT FILE NO.: FC-18-2255
DATE: 2022-12-07
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Jennifer Horrocks, Applicant
AND
Bruce McConville, Respondent
BEFORE: The Honourable Mr. Justice Marc Smith
COUNSEL: Mimi Marrello, Counsel for the Applicant
Bruce McConville, Self-represented Respondent
HEARD: November 16, 2022, by video conferencing
REASONS FOR DECISION
M. Smith J
[1] The Applicant, Jennifer Horrocks, seeks to have the Respondent, Bruce McConville’s Answer struck and that the matter proceeds by way of uncontested trial. Furthermore, Ms. Horrocks seeks an order that the property located at 53 Summerwalk Place, Ottawa, Ontario (“matrimonial home”), be transferred and/or vested to her.
[2] Mr. McConville opposes the motion.
[3] For reasons that follow, Ms. Horrocks’ motion is partially granted.
Background
[4] The parties were married on December 19, 2009, and separated on September 3, 2018.
[5] The parties have one biological child together. Ms. Horrocks has two other children from her previous marriage.
[6] Ms. Horrocks commenced her Application on November 19, 2018. Mr. McConville filed his Answer on December 17, 2018.
[7] Since the commencement of the Application, there have been multiple court proceedings. The relevant ones for this motion are summarized below:
a. A Case Conference was held on January 30, 2019, before Williams J. Mr. McConville was ordered to provide the necessary and relevant disclosure pertaining to his personal and business assets. He was also ordered to continue to pay electricity, gas, water, property taxes, property insurance, and the mortgage for the matrimonial home.
b. A motion was heard on June 11, 2019, by MacEachern J. Mr. McConville was seeking, amongst other things, unsupervised parenting time with the children and the sale of the matrimonial home. Ms. Horrocks was awarded costs in the amount of $3,000, payable forthwith.
c. A motion was heard on September 24, 2019 (and continued on November 14, 2019, and December 10, 2019) by Ryan Bell J. Mr. McConville was first ordered not to sell a business property located on St. Anne Avenue, Ottawa, Ontario (“St. Anne property”), and provide disclosure. Then, in subsequent appearances, it was determined that Mr. McConville had sold the St. Anne property, contrary to the court order. He was ordered to make two payments into court. The first payment to be made was $300,000, from the proceeds of sale of his company. The second payment to be made was $280,000, from the proceeds of sale of the St. Anne property. Ms. Horrocks was awarded costs in the amount of $2,500, payable forthwith.
d. A contempt motion was heard on January 28, 2020, by Phillips J. Mr. McConville was found in contempt of the orders of Ryan Bell J. He was incarcerated for 30 days and ordered to pay a penalty of $2,000 per day for every day that he failed to comply with the orders. Ms. Horrocks was awarded $6,000 in costs as well as a protective restraining order.
e. On July 21, 2020, the parties appeared before me. Motions were sought by the parties for a variety of reliefs, including further contempt against Mr. McConville for his continued failure to provide financial disclosure, as previously ordered. The motions were adjourned. Mr. McConville was ordered to transfer his RRSP holdings to Ms. Horrocks, to be credited against the penalty amount that was accumulating against Mr. McConville in the amount of $2,000 per day, as per the order of Phillips J.
f. On February 1, 2022, a motion was heard by me. Ms. Horrocks sought to suspend Mr. McConville’s parenting time with the child on the basis of a Voice of the Child report dated September 15, 2021, where the clinician opined that the child was at risk of emotional harm. The motion was granted. Ms. Horrocks was awarded costs in the amount of $13,500.
The Issues
[8] The issues to determine are:
a. Should Mr. McConville’s Answer be struck?
b. Should the matrimonial home be transferred to Ms. Horrocks?
Issue #1 – Should Mr. McConville’s Answer be struck?
Legal principles
[9] Rule 1(8)(c) of the Family Law Rules, O. Reg. 114/99 (“FLR”) provides that if a person fails to obey an order, the court may order the striking of a pleading.
[10] Rules 1(8.1) of the FLR gives the court the authority to make any order described in r. 1(8) when a party fails to follow the rules.
[11] Striking a party’s pleadings is a drastic remedy that should only be applied in exceptional circumstances, and only to be granted on a proper evidentiary basis: Chiaramonte v. Chiaramonte, 2013 ONCA 641, at paras. 32 and 33.
[12] Striking a party’s pleading is a three-prong test: (i) is there a triggering event justifying the striking of pleadings? (ii) is it appropriate to strike the pleadings in the circumstances of this case? (iii) are there other remedies in lieu of striking pleadings that might suffice?: Van v. Palombi, 2017 ONSC 2492, at paras. 29 to 32.
[13] A triggering event exists when there has been non-compliance of court orders.
[14] The factors to consider when deciding if it is appropriate to strike the pleadings include: (i) the extent and persistence of the non-compliance; (ii) whether the disobedience of the order and rules was wilful in nature; (iii) whether the non-compliant party made reasonable efforts to comply and is able to provide explanations for the breaches; (iv) where the non-compliance relates to support orders, the payor’s financial circumstances and their ability to pay support; (v) the remedy should be proportionate to the issues in question and the conduct of the non-compliant party: Nikfar v. Nikfar, 2022 ONSC 1252, at para. 65.
[15] Other remedies that are available in lieu of striking pleadings include: (i) adjournment to provide more time to the non-compliant party to effect compliance; (ii) strike the pleadings on financial issues and allow the non-compliant party to continue with the parenting issues; (iii) reinstate the non-compliant party’s pleadings on conditions; (iv) invite the other party to seek an adverse inference at trial if material disclosure remains outstanding: Nikar v. Nikfar, at para. 79.
Analysis
Triggering event
[16] I am satisfied that there are several triggering events justifying the striking of Mr. McConville’s pleading.
[17] First, Mr. McConville has not complied with the disclosure orders. While I acknowledge that he has disclosed numerous documents, it is not complete. The outstanding disclosure is as follows:
a. Financial statement and corporate tax return for McConville’s Garage Ltd. for the fiscal year ended March 31, 2019.
b. Complete general ledger for McConville’s Garage Ltd. for the fiscal years ended March 31, 2016, to March 31, 2019, with all details of the shareholder account.
c. Complete general ledger for 1270349 Ontario Inc. for the fiscal years ended December 31, 2016, to December 31, 2019, with all details of the shareholder account.
d. Copies of any mortgage or other credit applications during the years 2016 to 2019, if any.
e. Copies of loan agreements and details on the long-term debt held by McConville’s Garage Ltd. and 1270349 Ontario Inc. (including covenant/margin compliance, if any).
f. Details of all assets held by 1270349 Ontario Inc. (including real estate).
g. Corrected T4 slip for 2018 to Ms. Horrocks from McConville’s Garage Ltd.
h. Income determination report.
[18] Mr. McConville argues that there are some errors in the disclosure orders of Ryan Bell J. As such, he says that not all disclosure orders can be fulfilled. However, none of these orders have been appealed.
[19] Mr. McConville also argues that he needed more time to respond to Ms. Horrocks’ motion. More time would not assist Mr. McConville. He acknowledges that he has not fully complied with the disclosure orders, and in any event, these orders have been outstanding since the fall of 2019.
[20] Second, Mr. McConville has failed to pay the carrying costs of the matrimonial home. Ms. Horrocks had to assume all costs associated with the matrimonial home.
[21] Third, Mr. McConville has not complied with the order of Ryan Bell J., where he was ordered to pay into court, the total sum of $580,000, from the proceeds of his businesses and the St. Anne property. He says that he did not have the money to make these payments.
[22] Mr. McConville claims that he burned $1,050,000 in cash. This issue was addressed by Phillips J. at the contempt hearing. Phillips J. did not believe that Mr. McConville would have deliberately set fire to over $1,000,000.
[23] Fourth, Mr. McConville has failed to pay five cost orders totalling $28,000, dating back to November 27, 2019, to more recently, on February 1, 2022.
[24] Fifth, Mr. McConville has failed to pay the fine imposed by Phillips J., in the amount of $2,000 per day, for every day of further non-compliance of the orders of Ryan Bell J. Ms. Horrocks says that as of November 14, 2022, the penalty owed to her totalled $1,974,000. Mr. McConville argues that the orders were complied with as of March 6, 2020, when he filed an affidavit and exhibits with the court. However, there is a contradiction in his evidence. As noted above, Mr. McConville has already acknowledged that he was unable to fully comply with Ryan Bell J.’s orders.
Is it appropriate to strike the pleadings?
[25] Mr. McConville has shown malevolent non-compliance with court orders. During his sentencing at the contempt hearing, Phillips J. summarized Mr. McConville’s conduct regarding his alleged burning of money as follows: “You are making a mockery of this court and its process, something I will not allow. I have already explained how I find you in contempt of this court. You are conducting yourself with intent to deliberately and wilfully frustrate the proper administration of justice. More particularly, I find what you have done to be morally reprehensible because what you claim to have done wilfully and directly undermines the interests of your children. All parents have an obligation to provide for their children to the best of their ability. You have set out to do damage to your children’s future by destroying, on purpose, the financial wherewithal that you had to provide for their best interests.”
[26] Mr. McConville has displayed egregious behaviour in the sale of his assets and the alleged burning of cash, in excess of $1,000,000.
[27] Mr. McConville was jailed 30 days for non-compliance, but this has not deterred his non-compliance. He has persistently not followed court orders.
[28] Mr. McConville has not made reasonable efforts to comply with the court orders. He has wilfully and continuously ignored cost orders, he has dissipated his assets, he has failed to pay monies into court, and he has failed to pay the carrying costs of the matrimonial home.
[29] Mr. McConville argues that he is impoverished. If one is to accept that Mr. McConville burned money in excess of $1,000,000, then he is the author of his own misfortune. Along with my colleague, Phillips J., I do not believe that Mr. McConville burned the money.
[30] Mr. McConville also argues that he is very sick, having experienced three seizures recently. While I sympathize with Mr. McConville’s health issues, it does not justify his repeated non-compliance of orders, which all started in January 2019, and have been continuous since then.
[31] In my view, there are no exceptional circumstances warranting that I should exercise my discretion and not strike Mr. McConville’s Answer. The evidence of non-compliance of court orders is overwhelming and a striking of a pleading would be proportionate and reasonable.
Other remedies in lieu of striking the pleadings
[32] As I indicated above, giving more time to Mr. McConville would not assist him in complying with the disclosure orders because he claims that he cannot respect them because of errors. Giving him more time to comply with the cost orders, or the penalty, would also be futile because he claims to be impecunious.
[33] Mr. McConville has been continuously non-compliant with court orders since 2019 and he has not demonstrated an ability to comply with a court order.
[34] I find that striking Mr. McConville’s pleading is the only remaining remedy available in this instance. It is drastic but it is appropriate, and it is supported by the evidence.
[35] That being said, the striking of Mr. McConville’s pleading will only relate to the financial issues.
[36] I am not prepared to strike Mr. McConville’s pleading regarding the parenting issues. Although the child has not had any direct contact with Mr. McConville since September 2021, the issues are complex. These complexities have all been set out in my unreported decision dated February 1, 2022. In my view, the parenting issues are deserving of being fully explored with the participation of all parties.
Disposition
[37] Mr. McConville’s Answer relating to the financial issues is struck. Ms. Horrocks may proceed by way of an uncontested trial on the financial issues. Mr. McConville shall not be entitled to receive notice and/or participate in the uncontested trial.
Issue #2 – Should the matrimonial home be transferred to Ms. Horrocks?
Legal principles
[38] Section 9(1)(d)(i) of the Family Law Act, R.S.O. 1990, c. F.3 provides that a property may be transferred to or vested in a spouse, to satisfy an obligation imposed by an order.
[39] Section 100 of the Courts of Justice Act, R.S.O. 1990, c. C.43, states that a court may, by order, vest in any person, an interest in real or personal property that the court has authority to order be disposed of, encumbered, or conveyed.
[40] Vesting orders are discretionary. These orders are enforcement type orders. The court must be satisfied that a payment order will likely not be complied with, absent of a more intrusive provision. Furthermore, the court must be satisfied that there is some relationship between the value of the assets to be transferred and the amount of liability: Lynch v. Segal, (2006), 82 O.R. (3d) 641, 2006 42240 (ONCA), at paras. 27-33.
[41] To ensure compliance, a vesting order may be granted to protect a matrimonial home, pending the final outcome of the litigation, based on the payor’s previous actions and reasonably anticipated future behaviour: Verch v. Verch, 2012 ONSC 2621, at para. 39.
Analysis
[42] Ms. Horrocks argues that the only remaining asset within Mr. McConville’s control is the matrimonial home, valued at approximately $800,000, with an existing mortgage of $452,000. She argues that she has a valid and separate claim to ownership in the matrimonial home.
[43] Ms. Horrocks has calculated an equalization payment of $550,000 owing to her.
[44] Ms. Horrocks is concerned that given Mr. McConville’s debts, including a large debt owing to Revenue Canada, she may lose the home that she shares with her children.
[45] Mr. McConville says that the transfer of the matrimonial home should only take place as part of a settlement and, in any event, there is an existing Revenue Canada debt that needs to be paid.
[46] At the end of the motion, I asked the parties to provide me with additional submissions regarding the court’s authority to grant a vesting order, when it has knowledge of an outstanding Revenue Canada debt.
[47] Ms. Horrocks submits that a party seeking a vesting order does not have a statutory duty to Revenue Canada, if the debt has not yet been crystallized: Nikfar v. Nikfar, at para. 101.
[48] Mr. McConville says that a vesting order is not necessary in this case because the “arguments are not persuasive enough to warrant it”. He claims that if a vesting order is granted, Revenue Canada should be compensated because they are owed over $230,000.
[49] As at the date of the hearing of the motion, no liens had been registered on the matrimonial home in favour of Revenue Canada. Revenue Canada does not hold the status as a creditor. Mr. McConville’s debt to Revenue Canada is to be treated like any other debt. As such, I find that the existence of the Revenue Canada debt does not alter the court’s authority to grant a vesting order.
[50] There is no doubt that Ms. Horrocks will be entitled to receive a significant sum from Mr. Horrocks, either as an equalization payment, a retroactive and ongoing support (child and spousal) payment, satisfaction of costs awards, or payment of the ongoing penalty that continues to be incurred at the rate of $2,000 per day.
[51] I reject Mr. McConville’s submission that there is insufficient evidence to warrant the issuance of a vesting order. To the contrary, the evidence before me is overwhelmingly clear that given his previous reprehensible conduct, it is reasonably anticipated that he would not voluntarily pay any future amounts due and owing to Ms. Horrocks.
[52] I believe that a vesting order of the matrimonial home will not only ensure compliance with future court orders, but it will ensure that Ms. Horrocks’ interest in the matrimonial home is not lost.
[53] I find that because of the extraordinary circumstances of this case, it is appropriate that I exercise my broad discretion and grant the vesting order requested.
Disposition
[54] Ms. Horrocks’ motion is granted. Title of the matrimonial home shall be vested from Mr. McConville to Ms. Horrocks.
CONCLUSION
[55] For the foregoing reasons, I make the following orders:
a. Mr. McConville’s Answer regarding all financial issues is struck.
b. Ms. Horrocks may proceed to an uncontested trial on the financial issues, without notice to Mr. McConville.
c. Title of the matrimonial home shall vest from Mr. McConville to Ms. Horrocks.
[56] On the issue of costs, the parties are encouraged to reach an agreement. Failing which, Ms. Horrocks shall serve and file her written submissions, limited to five pages, excluding her Bill of Costs and Offers to Settle, within 30 days of these Reasons for Decision. Mr. McConville shall serve and file his response, within 15 days thereafter, with the same page restrictions.
M. Smith J
Released: December 7, 2022
COURT FILE NO.: FC-18-2255
DATE: 2022-12-07
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Jennifer Horrocks
Applicant
– and –
Bruce McConville
Respondent
REASONS FOR DECISION
M. Smith J
Released: December 7, 2022