NEWMARKET COURT FILE NO.: FC-19-59982 DATE: 20230105

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Rhoda Sun Applicant – AND – Gordon Man-Kit Lo Respondent

Counsel: Samuel Eng and William Murray, for the Applicant Eduardo Lam, for the Respondent

HEARD: December 14, 2022

REASONS/RULING

JARVIS J.

[1] There are two motions before the court. The applicant (“the wife”) seeks an Order striking the pleadings of the respondent (“the husband”) or, in the alternative, requiring him to provide within thirty days itemized disclosure and to meet with her valuation and income analysis expert. The husband seeks Orders varying a $6,500 monthly spousal support Order made by Bennett J. on January 28, 2022 (“the support Order”) and for the sale of the parties’ jointly owned matrimonial home in which the wife and the parties’ two children (who appear to be estranged from their father) reside. This Ruling will only deal with the wife’s disclosure complaint and whether the spousal support Order should be varied because the parties resolved the matrimonial home sale issue at court (see below).

Preliminary Objection

[2] When argument began the husband objected to certain paragraphs and related exhibits contained in an affidavit of the wife sworn on December 9, 2022 being considered. He requested that they be struck. The affidavit was, ostensibly, sworn in reply to the husband’s November 30, 2022 affidavit responding to her motion. Paragraphs 11 to 14 and Exhibits “C” and “D” were the impugned parts. These dealt with certain financial transactions allegedly involving the husband, the wife, their sons and the operation of the husband’s business account. A document-examiner’s report dated January 5, 2022 (Exhibit D) had never been disclosed to the husband before the wife’s affidavit was served.

[3] FLR 14(20) deals with evidence restrictions for motions:

(20) The following restrictions apply to evidence for use on a motion, unless the court orders otherwise:

1. The party making the motion shall serve all the evidence in support of the motion with the notice of motion.
2. The party responding to the motion shall then serve all the evidence in response.
3. The party making the motion may then serve evidence replying to any new matters raised by the evidence served by the party responding to the motion.
4. No other evidence may be used. O. Reg. 114/99, r. 14 (20).

[4] While Mr. Murray conceded that, prima facie, the impugned materials offended the rule, he suggested that the court could still consider their contents. His invitation was, and remains, declined. It is patently clear that the wife not only failed to disclose this proposed evidence well before the hearing date, but also could have included it at any time in her material when preparing for her motion. Nothing in the husband’s responding evidence raised new issues deserving of the evidence that she proposed be considered.

Background

[5] Some background is in order. These are the relevant facts:

(a) The parties married on August 3, 1996 and separated on May 23, 2019. There are two children of the marriage, neither of whom is any longer a qualifying child of the marriage for child support purposes;

(b) The husband is a dentist/dental surgeon who has operated his own practice for about thirty-four years. The wife worked for him as a receptionist for about thirty years before the parties separated. She became intimately familiar with the husband’s billing practices;

(c) On or about March 12, 2020 the parties signed an Agreement and pursuant to those terms the husband agreed to pay $3,104 monthly child support and $5,162 monthly spousal support. These amounts were based on a $235,500 income propounded by the husband and a $7,372 income for the wife;

(d) Shortly after the agreement was signed, the Covid-19 pandemic shut down normal business activities in the Province of Ontario and globally. This had a significant impact on the husband’s practice;

(e) On November 9, 2022, MacPherson J. made a Case Conference Order which, among other things, provided for reciprocal disclosure exchange and questioning on a date to be determined after receipt of the disclosure;

(f) The wife experienced considerable difficulty over a prolonged period of time obtaining financial disclosure from the husband so that her expert could value his dental practice and analyze his income for support purposes. She had retained a CBV expert (Feldman); the husband did not. He was relying on a “broker” to express an opinion about his income;

(g) The wife brought a motion for support that was heard by Bennett J. on January 26, 2022. The court accepted that the wife had a $33,280 yearly income. The husband did not challenge the wife’s support entitlement but he disputed the amount that she was seeking;

(h) In ordering the husband to pay $6,100 monthly spousal support, Bennett J. observed (at paragraph 61 of his endorsement) that:

… the most logical reasonable and “just” determination of the respondent’s income for purposes of this motion and a temporary support order, is that which the parties themselves agreed to and which the respondent was apparently still prepared to agree to after the provincial lockdown in March 2020. That amount is $235,000 per annum. [1]

(i) Especially relevant to the wife’s motion now before the court are the following comments made by Bennett J. about the husband’s disclosure history:

The respondent on the other hand, has clearly not been forthcoming with disclosure, nor has he been cooperative with respect to the applicant’s expert. In addition, the Court finds it interesting that the respondent has not retained an expert of his own until now. This motion was set approximately six months ago. The respondent therefore was well aware that the motion would be proceeding and the Court would have expected that he would have retained an expert prior to now to if not critique the applicant’s experts report to provide a report of his own. [2]

(j) Added further was this comment:

The respondent claims that he is going to retain an expert to provide an analysis of his income. Should he do so, then the Court finds that that may result in a “material change” such that the respondent, or the applicant, could bring this matter back for a further motion prior to trial. [3]

(k) For the January 2022 motion, the wife submitted an income analysis prepared by her expert. Bennett J. was not prepared to accept the significantly higher income for the husband that she proposed;

(l) Further disclosure was provided by the husband on March 18, 2022 in response to outstanding disclosure requests from the wife. For this motion, the wife disputes that the answers provided were truthful or fulsome and she itemized what she claims is outstanding in her Notice of Motion (see below);

(m) On or about April 20, 2022, an expert (Silver) retained by the husband provided what the husband describes is a “limited critique” of the wife’s Feldman income analysis. This critique suggested a three-year (2019-2021) income average for the husband of $107,000. It is noteworthy that a Limited Critique Report such as that provided by the husband does not permit, according to Practice Standards of the Chartered Business Valuation Institute (“CBVI”), the expression “of any conclusion of a financial nature in the context of litigation or dispute” [4];

(n) The parties agreed to sell the matrimonial home on May 25, 2022, after which the property was listed for sale using an agent proposed by the wife and at an agreed listing price (to both of which the husband says he reluctantly agreed);

(o) The wife’s expert delivered a responding report on June 21, 2022 which considered the husband’s critique. Mr. Feldman commented that the scope of the husband’s (Silver) report prevented him from corroborating or agreeing with her;

(p) Given the parties’ continuing dispute about the husband’s disclosure, the husband suggested that the parties’ experts speak to each other. This suggestion was contained in four letters sent to the wife’s counsel (July 16, 2022 to October 24, 2022). The wife rejected these overtures. In a letter from her counsel dated October 31, 2022 her lawyers responded as follows:

The idea of getting the experts to be involved is that each would give their own independent evaluation and, if there is a difference, each expert would assess the manner in which the other expert conducted his or her assessment. There are different models that can be used to value a business. Then, each party would be arguing in court as to why their expert’s opinion should be accepted. If the two experts consult with each other, it presents a situation where each party’s expert has an opportunity to try to influence the other expert in a manner that prefers his client’s position. [5]

(q) The wife maintains that the husband’s critique report is of no assistance to this court because it is non-compliant with industry standards and there remains important, relevant disclosure comprising:

i. Grouped year-end trial balances, detailed general ledgers, year-end adjusting journal entries; ii. Related party transaction details, including wages, rent and personal expenses paid by the practice on behalf of the husband, his family members and any other non-arm’s length parties; iii. Appointment books, patient’s records, annual billing reports, annual collection reports, annual overall practice production reports; iv. Documentation regarding the valuation of the husband’s practice, or offers to purchase this practice from 2019 to date; v. Utility statements for the husband’s practice from 2018 to date; vi. T4 slips and T4 summaries for all employees for 2016 to 2020; vii. Copies of applications for government programs, business interruption insurance; viii. All documentation regarding the closure of RESP account O19, including cheques used to withdraw money from the account, and any documentation showing accounts to which the money was transferred.

(r) The husband has never delivered a response from his expert addressing the concerns expressed by the wife’s expert;

(s) Although permitted by MacPherson J. on November 9, 2020, there has been no questioning.

[6] The wife also seeks an Order that the husband attend for an interview with her expert, in the presence of her counsel, to answer any questions the expert might have regarding his dental practice.

[7] With respect to the sale of the matrimonial home, the parties consented to an Order for its sale shortly after court began and the court outlined its concerns, intimating how the parties might prefer to deal with that matter. On consent, an Order for sale was made on December 16, 2022. No further reference to that issue (including costs) will be made.

Discussion

Disclosure

[8] As frequently observed, non-disclosure in family law cases is a cancer that must be treated robustly. More recently courts have been less reluctant to strike pleadings [6], to hold accountable those “who would deny justice to their former spouses” [7]. Notwithstanding the calls for a “culture shift”, care must still be taken to avoid weaponizing non-disclosure complaints, particularly where experts are involved and where there has been significant (but allegedly incomplete or non-responsive) disclosure provided. Many of the wife’s non-disclosure complaints in this case are based on her historical familiarity with the husband’s practice and her refusal to accept his explanations. She relies on her expert’s advice dealing, for example, with the allegedly dubious reliability of the opinions being expressed by the husband’s expert because of limitations to the scope of Ms. Silver’s critique and alleged deficiencies in the husband’s record keeping.

[9] It is a matter of great concern to the court that in answer to Mr. Lam’s fourth letter to Mr. Eng dated October 24, 2022 suggesting, among other things, that “the parties’ valuators speak to each other to discuss the outstanding valuation issues to narrow the issues regarding income valuation…” [8] the wife rejected that overture (see subparagraph 5(p) above) only to then request in her Notice of Motion an Order that the husband meet with her expert to answer questions.

[10] The wife’s position is ill-conceived. Both parties are responsible for unreasonable delay in this case, although it is impractical, and probably pointless at this juncture, for the court to parse out which party should bear more responsibility. Neither party seems to have given much thought to, for example, scheduling questioning and having their experts attend or to Family Law Rule 1(7.2)k which permits the court to make an order “that any expert witnesses for the parties meet to discuss the issues, and prepare a joint statement setting out the issues on which they agree and the issues that are in dispute”.

[11] This court is not going to weed through the parties’ conflicting evidence about what disclosure was requested and provided. Or not provided. Or inadequately provided. Or deceptively answered. Or non-compliant with the record-keeping standards of the dental profession. The husband and his expert know what are the concerns of the wife and her expert and he and his expert know the wife’s concerns about his. The parties should proceed to their questioning without any further delay; their experts may attend. The court will set a deadline by which the questioning shall proceed, failing which a party’s right to question is disallowed.

[12] One last point about disclosure.

[13] The husband complains about the wife’s request for disclosure that would involve employee information and patient records taking the position that disclosure of this information would, for example, breach doctor-patient confidentiality. Dentistry is a regulated health profession pursuant to the Regulated Health Professions Act (“the RHPA”). [9] Ontario Regulation 853/93 under the RHPA deals with Professional Misconduct, s. 2.17 of which defines misconduct to include the giving of “information about a patient… except with the consent of the patient… or allowed by law”. The wife’s evidence is that there was a substantial unrecorded cash component to the husband’s practice (denied by him) and that he could, if he wanted, provide an unredacted client list (which is what he is professionally required to maintain in discoverable format for regulatory purposes). The husband says that he provided to the wife his appointment books for certain periods of time (when his office was open during the pandemic) redacted for patient names but providing procedure codes but is concerned that disclosure of full patient details would result in the wife approaching the patients to persuade them to change their dental provider (ultimately, if even true, a little like the Titanic aiming for the iceberg).

[14] There is no credible evidence, or any authority, before this court warranting the restriction sought by the husband with respect to his appointment books. The parties are reminded of FLR 20(24):

(24) When a party obtains evidence under this rule, rule 13 (financial disclosure) or rule 19 (document disclosure), the party and the party’s lawyer may use the evidence and any information obtained from it only for the purposes of the case in which the evidence was obtained, subject to the exceptions in subrule (25).

Variation of support

[15] The husband seeks to change, and reduce, the temporary spousal support Order of $6,500 monthly made by Bennett J. less than a year ago on January 28, 2022. That Order was based on a $235,000 yearly income attributed to the husband and upon which amount the husband agreed: the husband wants the amount reduced to $2,419 a month based on the $107,000 income critique prepared by his expert slightly more than two months after the Order was made.

[16] Sections 17(1)(a) and (4.1) of the Divorce Act (“the Act”) [10] provide as follows:

17 (1) A court of competent jurisdiction may make an order varying, rescinding or suspending, retroactively or prospectively,

a. a support order or any provision of one, on application by either or both former spouses

(4.1) Before the court makes a variation order in respect of a spousal support order, the court shall satisfy itself that a change in the condition, means, needs or other circumstances of either former spouse has occurred since the making of the spousal support order or the last variation order made in respect of that order, and, in making the variation order, the court shall take that change into consideration.

[17] In Grass v. Hropak [11], the case involved (among other things) a motion to vary and reduce a temporary October 2019 support Order made on consent at a case conference. The parties had agreed to use a three-year average (2016 to 2018) for the income of the husband (the payor). He alleged that his income earned afterwards was, on average, less than that set out in the Order and sought a reduction. The wife resisted the relief for several reasons, two or which are relevant to the motion before this court. She contended that there had not been a material change in the husband’s circumstances and that the reliability of his post-Order income was questionable. In declining to change the spousal support term, Kraft J. noted the court’s approach to variation requests involving temporary Orders.

[87] The courts generally avoid varying interim orders on motions prior to trial unless the circumstances are urgent. Jarvis J., in Pakka v. Nygard, stated as follows:

The variation of an interim order is a difficult area. Policy considerations dictate that such applications be discouraged. They increase the stress and uncertainty of the parties and vastly increase the cost of litigation. To echo the words of Wolder J. in Thompson v. Thompson, [1995] O.J. No. 2106 (Ct. J. (Prov. Div)), such that an order should be varied only where the failure to vary “would cause the payor to suffer undue hardship or that a continua-tion of the existing order would be incongruous or absurd.” (Underlining added in the original).

[18] Other cases have used “compelling”, “exceptional” and “rare” to describe the circumstances warranting a variation. [12] In Mancini v. Mancini [13] the payor sought to vary a temporary Order that had imputed to him, with his consent, a $100,000 income: he claimed that when the Order was made he had not been able to provide adequate financial disclosure and that he was now able to provide disclosure suggesting that his actual income was $40,800 a year. Unlike the self-employed husband in the case before this court, the new evidence about Mr. Mancini’s income was viewed suspiciously because the business in which he was engaged was closely connected to a company operated by family members. His mother had provided an affidavit containing his accounting and income tax information. Smith J. considered the test for variation of temporary spousal support Orders under the Act:

[26] The test for variation of temporary orders was summarized by Justice Chappel in Damaschin-Zamfirescu v. Damaschin-Zamfirescu, (2012) ONSC 6689:

18 The Divorce Act does not specifically address the issue of variation of temporary spousal support orders. Section 17 of the Divorce Act sets out a framework for the variation of support and custody orders, however that section only applies to variation of final spousal support orders made pursuant to section 15.2(1) of the Act.

19 Despite the lack of specific provisions in the Divorce Act regarding variation of temporary orders, the court does have the authority to make changes to temporary spousal support orders in response to developments in the parties' situations and the availability of more fulsome evidence relevant to the spousal support analysis. The power to vary temporary spousal support orders made under the Act derives from the court's inherent jurisdiction to amend interlocutory orders. This ability to vary such orders is critical to ensuring fairness and justice as between the parties, given that temporary orders are often imperfect solutions based on very limited and usually untested information. As Sachs, J. stated in Chaitas v. Christopoulos, temporary corollary relief orders are intended to provide "a reasonably acceptable solution to a difficult problem until trial."

20 The test that applies on a Motion to vary a temporary spousal support order has evolved within the parameters of the general principle that parties in matrimonial proceedings should be encouraged to advance their case to trial as soon as possible. Using this foundational principle, the Ontario Court of Appeal determined in Lipson v. Lipson that proceedings to vary interim support orders should not be encouraged. It held that in order to succeed on a Motion to change a temporary spousal support order, a party must establish that there has been a substantial change in circumstances since the previous temporary order was made. Variation proceedings relating to temporary orders should not become the focus of the parties' litigation. The onus on a party who seeks to vary a temporary spousal support order rather than waiting until trial is a heavy one.

[27] There is a heavy onus on the party seeking to vary a temporary support order, in that the change of circumstances must be substantial since the previous order was made. A substantial change must also be material, meaning that “had it existed at the time…would likely have resulted in a different order (see Colivas v. Colivas, 2016 ONSC 715).

[28] “A party cannot rely on his own failure to provide adequate disclosure to argue that the decision based on inadequate disclosure should be given less deference.” (see Colivas v. Colivas, at par. 29).

[19] Smith J. declined to vary the Order because Mr. Mancini failed to persuade the court why he would have agreed to an income significantly in excess of what he was later propounding.

[20] This court is mindful of the observation made by Bennett J. in obiter that, depending on the evidence of an expert whom the husband claimed that he intended to retain, there could be satisfactory evidence of a material change warranting a variation. But that observation must be viewed in the context of the test and the evidence available, and which could have been provided, to the court when the support Order was made. In his November 30, 2022 affidavit the husband noted that a “significant difference from the January 2022 motion [was] that [he had] obtained a professional valuation of [his] income” (para. 8).

[21] So what is the context? And what is the husband now inviting the court to do? Again. The following observations are relevant:

(a) The wife delivered as comprehensive an analysis of the husband’s income as was possible in early May 2021 and supplied an addendum to it in December 2021;

(b) The wife had secured the January 2022 motion date six months before that motion was argued. Bennett J. noted the husband’s dilatory approach to his disclosure obligations (see paragraph 5 (i) above);

(c) The husband had done nothing more than have some discussions with an expert having similar qualifications to the wife’s expert before the motion was argued. Bennett J. was informed that the husband would be retaining an expert after the motion was heard;

(d) There is no evidence that the husband requested an adjournment of the motion heard by Bennett J.;

(e) The husband’s evidence before Bennett J. was that Covid had significantly impacted his practice in 2020 and 2021. Yet he appears to have agreed in January 2022 to the $235,000 income figure Bennett J. referenced (see 5 (h) above). And if he disagreed, he should have, but did not, appeal. The husband has simply repeated for this motion much of the evidence which was before Bennett J. and further information either in his possession or known to him when the support Order was made;

(f) Ms. Silver’s three-year averaging approach to the husband’s income is inappropriate in circumstances where two of those years were impacted by Covid and the global economy began reopening in late 2021;

(g) Ms. Silver’s critique was provided on April 20, 2022. The wife’s expert responded in a further report on June 21, 2022 pointing out scope of report concerns and (allegedly) deficiencies in the information upon which Ms. Silver had relied. The husband, not Ms. Silver, responded. Why not Ms. Silver? No explanation was given by the husband.

[22] Essentially, the parties (in particular, the husband) have invited the court in a regular one-hour motion to assess the reliability of disputed financial information involving experts that is best left to a trial. A party to a motion that involves, for example, financial disclosure and support has an obligation from the outset of a case to provide meaningful disclosure, retain an expert where valuation of a business interest is indicated and/or, in many cases, an expert to analyze a self-employed party’s income whether or not that income is earned through a non-arms-length corporation. The husband is asking this court to undertake a “do-over” of the support Order. This court is not persuaded that the husband’s evidence is sufficiently compelling to warrant any variation of the support Order. If the parties cannot settle, and if the issues of the parties’ incomes and spousal support must proceed to trial, the court can adjust for the amount of support that should have been paid. There are sufficient assets.

[23] The husband’s motion to vary the support Order is dismissed.

Disposition

[24] The following is Ordered:

(a) The parties shall conclude questioning by February 28, 2023. They may have their experts present for advice and guidance purposes, but the experts shall not otherwise participate in the questioning. Each party’s questioning shall be limited to three hours. The parties are to make themselves available, on reasonable notice, for questioning. The wife’s questioning of the husband shall proceed first, followed by the husband’s questioning;

(b) The questioning shall proceed on a single day to be arranged by counsel. If a party fails to question the other before the February 28, 2023 deadline, their right to question is disallowed;

(c) The parties are directed to have their experts comply with FLR 1(7.2)k and prepare a joint statement (without argument or other embellishment) of what are the disputed issues, identifying the reason for the dispute. This statement is to be concluded at least two weeks before the parties’ next conference event in these proceedings, which should be a settlement conference;

(d) The husband’s motion to vary the support Order of Bennett J. is dismissed.

[25] At the conclusion of argument, the parties were invited to submit their claims for costs. Since they had agreed that the issue involving the sale of the matrimonial home had been resolved on a “no costs” basis, each sought an all-inclusive amount equal to one-half of what they would have requested but for resolving that issue. The wife sought $3,000 and the husband sought $5,000.

[26] Ordinarily costs should follow the event but, in this case, no costs will be awarded to the wife. The husband’s repeated, and ignored or rejected, overtures to have the experts meet and collaborate on a range of potential outcomes for their client’s consideration was reasonable: the wife’s response was not.

Justice David A. Jarvis Date: January 5, 2023

[1] Sun v. Lo, 2022 ONSC 613. [2] Respondent’s affidavit sworn on November 14, 2022, para. 58. [3] Ibid, para.69. [4] CBVI Institute Practice Standard No. 140, Limited Critique Reports, paragraph 2. [5] Supra #2, at para. 18. [6] Altman v. Altman, 2022 ONSC 4479. [7] Manchanda v. Theti, 2016 ONSC 3776 at para. 77; aff’d Manchanda v. Theti, 2016 ONCA 909. [8] Exhibit P to the wife’s affidavit sworn on November 30, 2022. [9] S.O. 1991, c. 18, Schedule 1. [10] R.S.C. 1985, c.3 (2nd Supp.) as am. [11] 2020 ONSC 7803, at para. 87. [12] See, for example, Thom v. Thom, [2014] O.J. No. 2115, 2014 CarswellOnt 5708; Lusted v. Bogobowicz, 2021 ONSC 269 at paras 24-26. [13] 2020 ONSC 5259, 2020ONSC 5259 at paras 26-28.