NEWMARKET COURT FILE NO.: FC-17-53889-00

DATE: 2022-02-03

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Applicant, Lisa Anita Tsilker

Applicant

– and –

Respondent, Steve Tsilker

Respondent

Counsel for the Applicant: J. Brown Respondent: Self-represented

HEARD: February 2, 2022

RULING ON MOTION

A. Himel J.

Relief Sought and Granted

[1] The Applicant (“wife”) brings a motion for various heads of relief.

[2] The wife seeks an order striking out the Respondent’s (“husband”) pleadings for his failure to comply with the Order of Macpherson J. dated July 13, 2018 (the “Macpherson J. Order”) and the Order of Justice Bruhn dated June 24, 2022 (the “Bruhn J. Order”). In the alternative, the wife seeks an order requiring the payment of spousal support and child support arrears in the amount of $87,403.16 within two days, failing which she may bring a 14B motion to strike out the husband’s pleadings.

[3] For the reasons set out below I grant the wife’s alternate claim for relief, except that the sum of $87,403.16 must be paid by February 10, 2022.

[4] The wife seeks an order for outstanding disclosure in response to the request from Crowe Soberman dated December 7, 2020. For oral reasons given, I grant the relief sought by the wife.

[5] The wife seeks an order granting full and complete control over the sale of the parties’ yacht. On consent, the husband may continue to control the sale until May 31, 2022, failing which the control and exclusive possession is granted to the wife. The husband shall continue to be liable for the loan to Baron Finance for the period of November 16, 2018 to date of sale and for any/all storage and or operating costs of the yacht pending its imminent sale. Details of my order were provided orally to the parties.

[6] In her amended Notice of Motion the wife seeks an order that the husband be solely liable for the younger child’s post-secondary tuition and reasonable school-related expenses. On consent, the husband shall pay the sum of $18,000 per year on account of tuition, rent and four flights per year. For oral reasons given, I order an additional $2,000 per year on account of food. I also order that the younger child may use the balance held in the RESP (approximately $7,000) towards her incidental expenses, books or other expenses.

[7] The reasons that follow relate to the request to strike out the husband’s pleadings. The wife relies on her affidavits sworn January 4, 10 and 26, 2022 and her sworn Financial Statement dated January 4, 2022. The husband relies on his affidavit sworn January 19, 2022 and his sworn Financial Statement dated January 17, 2022.

Background

[8] The parties were involved in a relationship of approximately 20 years. They were married on May 24, 1997 and separated on March 30, 2017 or May 12, 2017. There are two children, ages 21 and 19.

[9] The parties are engaged in a high conflict dispute about the family’s finances, focusing on the husband’s income and the value of his business interests. The background is set out in the detailed motion rulings of Macpherson J. (July 13, 2018) and Bruhn J. (June 23, 2021).

[10] In July 2018, Macpherson J. applied a “rough justice” approach and imputed the husband’s annual income at $300,000, far below the wife’s requested imputed income. He ordered table child support in the amount of $2,878 per month, and spousal support in the amount of $7,000. This is reviewable at trial.

[11] Macpherson J. made findings in respect of the family’s pre-separation luxury lifestyle and the father’s post-separation lifestyle. Disclosure has been an ongoing issue throughout the litigation, as is the alleged cash elements of the husband’s business.

[12] In June 2021, Bruhn J. dramatically decreased the child support to $793 per month and materially increased the spousal support to $8,357 per month.

[13] The facts as I find them are set out below and will provide context for the analysis in respect of the request to strike out the father’s pleadings.

Law and Analysis

[14] 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.

[15] The three-pronged test governing the exercise of judicial discretion to strike a party’s pleadings 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 Justification

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

Contrary to the MacPherson J. Order dated July 13, 2018:

(a) he withheld spousal support for the period of December 1, 2019 to and including April 30, 2020 (total amount outstanding = $35,000);

(b) he did not pay child or spousal support in May 2020 (total amount outstanding = $9,878);

(c) he did not pay the interest owing on the line of credit for the period of September 2019 to and including April 2020 (total amount outstanding = $9,459.84);

(d) he unilaterally paid less than court-ordered support in May 2021, paying $9,137.84 instead of the $9,878 that was due, and in the memo of the cheque, he wrote: “Court costs filed $740.16 deducted” (total amount outstanding = $740.16); and

(e) he has not paid any monies towards the children’s special and extraordinary expenses (amount outstanding = $127,384).

Contrary to the Bruhn J. Order dated June 24, 2021:

(f) he withheld spousal support for the period of August 1 to and including December 31, 2021 (total amount outstanding = $41,785).

[17] The husband does not deny that he failed to pay the wife the amounts set out in the Macpherson J. Order. He justifies his actions stating that the wife was in breach of the costs order of Macpherson J. dated October 9, 2018. In accordance with same the wife was obliged to pay the sum of $45,200 forthwith.

[18] The wife states that she never paid her costs as she could not afford to do so. While the husband disputes her inability to pay, for the reasons that follow I reject the husband’s justifications for his non-compliance with court orders.

[19] While it was contemplated by the Macpherson J. Order that the yacht would be sold immediately following the July 2018 motion, and that the proceeds of sale be shared by the parties, the husband declined an offer to purchase the yacht in October 2018 (and did not disclose the offer until 2020). Consequently, the funds which Macpherson J. relied upon to deny the wife’s request for interim disbursements (being the sale proceeds), and which would have enabled the wife to pay her costs, continue to be “held” in an asset to which she has no access (although the husband continues to enjoy the yacht).

[20] The Macpherson J. Order also required the husband to pay the children’s section 7 expenses, including equestrian expenses (in respect of two horses owned by the parties). The wife asserts that he has failed to do so and now owes approximately $127,000. At the Bruhn J. motion, the husband submitted that he had met his section 7 obligations, except the equestrian expenses (as he had not received disclosure). This wife disagreed. The husband admits today to certain unpaid section 7 expenses, in addition to the equestrian expenses.

[21] With respect to the child’s unpaid university tuition, which lead to the wife dissipating the RESP, the husband’s explanation for his breach (that there were plenty of funds in the RESP, so it did not make sense to pay the tuition personally) is unacceptable. Macpherson J. ordered that the RESP be used towards the children’s living and other expenses, perhaps in recognition that the amount held was insufficient, as the RESP was limited to $84,000 and there were two children.

[22] I note that in 2018 the wife incurred equestrian expenses of $37,000 (which now amount to approximately $63,000). The husband states that he lacks evidence as to the children’s equestrian expenses as compared to the wife’s equestrian expenses. As the husband refused to pay any equestrian expenses, the sum of up to $37,000 which would have enabled the wife to pay costs has never been available.

[23] On November 19, 2018, the husband’s counsel sent a letter stating that:

“Mr. Tsilker is agreeable to your client borrowing $45,200 against the equity in the matrimonial home in order to pay the costs arrears owing to him pursuant to Justice Macpherson’s Order. He is not agreeable to any amount over and over what is owed in costs. To date, your client has funded this litigation without accessing the equity in the home. Please ask your client to make the necessary arrangements prior to November 26, 2018.”

[24] The husband’s decision to impede the wife’s access to funds, while enabling the costs to be paid, is indicative of his attempts to limit the wife’s ability to pursue her claims. Ultimately, the wife will have funds. At the July 2018 motion, Macpherson J. found that, “the value of the business alone is significant. While it may not be worth $8.25 million (of which he owns 50%), there is no doubt it is worth a significant quantity of money that will factor into equalization” (Macpherson J. Reasons at paragraph 81).

[25] In other words, at a time when the husband was already in arrears of the children’s equestrian expenses and had failed to sell the yacht, he impeded the wife’s access to funds. Enabling the wife to access additional equity from the matrimonial home would have facilitated the payment of costs. The husband’s position that, effectively, only he should have access to funds was highly unreasonable.

[26] The costs remained unpaid. In late 2019, the husband opted to use self-help. He withheld spousal support and the interest owing on the line of credit as a means of paying himself back for the costs owed.

[27] The husband chose to play a tit-for-tat game using the court-ordered spousal support, which is evidence of his misuse of power and control. The wife, having been imputed an income of $0 by Macpherson J., was denied funds that she required for living and other expenses. There are no acceptable explanations for the husband’s actions. Other remedies, as set out in Family Law Rule 1(8) were available to address the non-payment of costs.

[28] The non-payment of spousal support problem magnified when the husband filed his 2020 Income Tax Return claiming that he paid spousal support of $84,000, while the wife only claimed what she actually received, being $49,000.

[29] The wife refused to acknowledge the amount of $118,536 or $84,000. She also refused to re-file her taxes as this will obligate her to pay tax on support that she has not received. The husband attests that, consequently, the Canada Revenue Agency (“CRA”) has levied additional income taxes in the amount of $41,172.

[30] The husband admits that he inadvertently failed to pay child and spousal support for May 2020, in the amount or $9,879. However, he refuses to pay same (or other outstanding spousal support amounts) until he has proof that the wife has “properly re-filed her 2020 income taxes.” Such behavior raises a red flag and is another example of the highly improper use of pressure tactics.

[31] In respect of the Bruhn J. Order, the husband does not deny that he failed to pay the spousal support amounts set out therein.

[32] The husband advised the Court that he could not afford to pay the court-ordered spousal support because of the additional tax liability of $41,172. Therefore, he opted to pay CRA instead of the spousal support. However, within the past six months the husband sold his Aston Martin car (previously valued at $60,000 and $120,000). He has recently enjoyed a 2.5 week vacation to Mexico and the Caribbean with his girlfriend. The husband’s statements about his finances are not credible.

[33] As is evident from the wife’s Financial Statement sworn January 4, 2022, the joint chequing account is in overdraft by approximately $2,200, and she has approximately $410 total remaining in her personal chequing and savings accounts. Apart from these funds, she has approximately $68,000 remaining in her RRSP (reduced from $225,000) and approximately $4,200 in her TFSA (reduced from $55,000). She also has credit card debt in an amount over $28,000, an outstanding line of credit in the amount of $12,883, promissory notes owing to her parents for their financial assistance totalling $55,912, and taxes owing to the CRA in the amount of $61,679. Without the husband remedying his breaches and complying with the Bruhn J. Order going forward, the wife will continue to experience dire financial circumstances.

[34] There is no evidentiary basis to support the husband’s statement that the wife lives a very comfortable lifestyle particularly since: (1) he admits to having no contact with her; (2) she does not work; and, (3) she has been incurring significant legal fees since 2017 to pursue this litigation.

[35] I find that the husband has willfully and deliberately breached the Orders of Macpherson J. (2018) and Bruhn J. (2021). The husband’s decision to impede the sale of the yacht, to decline to pay any of the equestrian expenses, to force the wife to use the RESP funds to pay university tuition, to decline to pay other section 7 expenses, and to deny access to equity in the matrimonial home, impacted the wife’s ability to pay costs. To date, the wife has never received the spousal support and child support that is outstanding. The husband is the author of his own misfortune in respect of the increased tax liability and any penalties resulting from his claim relating to the spousal support paid.

The Appropriateness of the Remedy of Striking Out the Husband’s Pleadings

[36] In Manchanda v. Thethi,[^2] the Court held that, “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 confirmed same holding that “striking of pleadings is not reserved for drastic and extreme cases.”

[37] In Lamothe v. Ellis,[^3] 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.

[38] 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;

(b) the husband’s non-compliance can only be described as flagrant, wilful and calculated. He has a history of unilaterally imposing financial consequences on the wife when he feels it is justified. He withholds child and spousal support whenever he thinks it appropriate to do so. As recognized by Bruhn J. in her June 23, 2021 Endorsement at para 35: “The Respondent has delayed in providing support payments, unilaterally reduced support payments, and written vulgar messages on the support cheques”;

(c) the husband does not provide acceptable explanations for the breaches. The husband’s explanation that he “deducted the unnecessary income tax incurred from the wife’s spousal support” is not acceptable because he did not pay the support claimed. Moreover, the husband’s explanation that he withheld support and the line of credit between September 2019 and April 2020 because the wife owed him costs ignores the impact of this decision on the wife and children and is a blatant violation of a court order. The Court of Appeal in Holly v. Greco[^4] disapproved of parties taking matters into their own hands;

(d) the husband enjoys a lavish lifestyle. He is able to pay the support owed but continues to engage in willful disobedience of court orders. In addition to the luxury items identified on his Financial Statements sworn May 25, 2021 and January 17, 2022, which include a Bentley and several luxury watches, he travels regularly; and

(e) the husband’s pattern of calculated non-compliance has been ongoing for four years. The husband is well-versed in litigation. Striking the husband’s pleadings is proportionate to the issues in question and the husband’s unacceptable behaviour.

Other Remedies that Might Suffice

[39] There is one remedy that might suffice to avoid the need to strike out the husband’s pleadings, being that he pay the sum of $87,403.16 by February 10, 2022. The re-payment of these amounts owed, and ongoing the compliance with the Bruhn J. Order will enable the wife to meet her immediate financial needs.

[40] This remedy will also enable the matter to proceed to a trial in May 2022, rather than to an uncontested trial (that will proceed without the husband’s involvement).

[41] However, this remedy is only effective if the husband complies. If he chooses not to do so, clearly the remedy does not suffice. Evidence of non-compliance will likely result in the husband’s pleadings being struck out by a14B motion.

Costs

[42] Sections 24(1), (5) and (12)(a) and (b) of the Family Law Rules deal with the exercise of the court’s discretion when awarding costs, providing as follows:

SUCCESSFUL PARTY PRESUMED ENTITLED TO COSTS

24. (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.

DECISION ON REASONABLENESS

(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,

(a) the time properly spent on the case, including conversations between the lawyer and the party or witnesses, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order;

(b) expenses properly paid or payable; and

(c) any other relevant matter.

SETTING COSTS AMOUNTS

(12) In setting the amount of costs, the court 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. O. Reg. 298/18, s. 14.

[43] The principles guiding the court’s exercise of its discretion pursuant to the Rules are well-established. The primary objective, of course, is to enable the court to deal with cases in a fair and timely manner. Four fundamental purposes are served: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; (3) to discourage and sanction inappropriate behaviour by litigants;[^5] and (4) to ensure that cases are dealt with justly.[^6]

[44] The wife was wholly successful with her request to have this matter heard by the Court. Several of the issues were generally agreed to at the motion (the yacht, the commitment to support the younger child’s education, some of the disclosure) and a motion respecting these issues was unnecessary. The issues before the Court are of significant importance to the parties. Given the husband’s decision to breach the orders and withhold support, the wife had no option but to bring this motion.

[45] Without including time spent to prepare or argue the motion, the wife seeks full recovery of approximately $20,000, substantial recovery of $18,000 or partial recovery of $12,000. The husband proposes that each party pay his/her costs.

[46] The wife made an Offer to Settle on January 31, 2022. She was prepared to accept the sum of $51,663 on account of support arrears including the missed May 2020 payment, with a delayed payment schedule. She beat this part of her severable offer and met or beat the other items in dispute, being disclosure and the yacht.

[47] The husband acted unreasonably and, while I have declined to make a finding of bad faith, he is cautioned about his actions on a go-forward basis.

[48] Substantial recovery costs are reasonable in the circumstances.

[49] In Arthur v. Arthur,[^7] Justice Deborah Chappel had the following to say, at paragraph 28:

The principles of proportionality and reasonableness are “the touchstone considerations to be applied in fixing the amount of costs” (Beaver, at para. 12). In determining the appropriate quantum, the court should consider the amount that the unsuccessful party could reasonably have expected to pay in the event of lack of success in the litigation (Lupien v. Carmichael, 2017 ONSC 2929 (S.C.J.); Darling at para. 12).

[50] I have considered the rate charged by the wife’s counsel and it is reasonable having regard to her experience. I have considered the disbursements and I also find them to be appropriate and reasonable. However, the materials could have been more concise, and the hours billed could have been reduced.

[51] For all of these reasons, I have decided that legal fees and disbursements in the amount of $16,000 (inclusive of HST) are fair, reasonable and proportionate.

[52] The husband shall pay the costs to the wife within 30 days.

Next Steps

[53] If the husband complies with this Order, he may proceed with his motion on February 16, 2022. However, the parties are encouraged to resolve that motion given that I am directing the case to be heard during the May 2022 trial sittings. If that motion is resolved, the parties can file a 17C stating that the attendance is to be converted to a Trial Scheduling Endorsement Form Conference. A copy of the 17C shall be emailed to my judicial assistant so that I can provide directions for that conference.

[54] Upon payment of the sum of $87,402.16, the wife shall provide the husband with a signed letter setting out the spousal support that she has now received on account of the arrears, and attributing the appropriate amounts for 2020, 2021 and 2022 (to date). At trial, the husband may seek a credit on account of any amount of spousal support paid to the wife upon which she is not liable to pay tax and, consequently, is not tax deductible to him.

[55] If the husband fails to comply, in addition to the 14B directions set out above, the wife may proceed by way of a 23C affidavit. This will form part of the evidence at the uncontested trial, which shall be heard in the May 2022 trial sittings. The 14B shall be directed to my attention and I will address same and provide further directions.

[56] The husband shall receive a credit for the costs payable to him by the wife, pursuant to the Order of MacPherson J., dated October 9, 2018, in the amount of $45,200, as against the outstanding section 7 expenses, the unpaid interest on the line of credit, and/or the equalization payment owing to the husband at trial/uncontested trial.

[57] No further motions may be brought by either party, without leave. Any 14B requests to be directed to my attention.

Order to Go:

1. In accordance with the order signed by me this day.

Justice A. Himel

Date: February 3, 2022

[^1]: Lamothe v. Ellis, 2021 ONSC 4883, at para 25. [^2]: Manchanda v. Thethi, 2016 ONSC 3776, at para 75, aff’d Manchanda v. Thethi 2016 ONCA 909. [^3]: Lamothe v. Ellis, 2021 ONSC 4883, at para 42. [^4]: Holly v. Greco, 2019 ONCA 464, at para 9. [^5]: Serra v. Serra, 2009 ONCA 395. [^6]: Mattina v. Mattina, 2018 ONCA 867 at para. 10. [^7]: 2019 ONSC 938.