COURT FILE NO.: FC-20-265-00 DATE: 20230413 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Delia Resendes, Applicant AND: Arnaldo Maciel, Respondent

BEFORE: R. S. Jain

COUNSEL: I. Petrakis, Counsel for the Applicant M. Melito, Counsel for the Respondent S. Codas and R. Hill, Counsel for the Non-Parties

HEARD: March 23, 2023

ENDORSEMENT

Introduction and Background

[1] The Applicant and Respondent began residing in a common law relationship in 2002 and were married on July 9, 2016. They were together for approximately seventeen years and had two children together, namely Joshua and Alex. The parties separated in September 2019. The Respondent has two adult children from a previous relationship, namely Christopher Maciel, and one of the named non-parties in this motion, namely Richard Maciel. The second non-party in this motion is Terrance “Terry” Papadacos. He is the Respondent’s accountant and the accountant for Simcoe Group Trust.

[2] The Applicant brought this motion seeking an order for disclosure from, and leave for questioning of, the non-parties Richard Maciel and Terry Papadacos pursuant to r. 19 (11) and r. 20 (5) of the Family Law Rules, O. Reg. 114/99 (“the Rules”).

[3] The Applicant commenced the Application in 2020. The parties came before me for a motion in September 2021 on issues of disclosure, exclusive possession of the matrimonial home and sale of the matrimonial home. I released my decision on October 1, 2021, wherein I made an Order granting the Respondent exclusive possession of the matrimonial home so that he could quickly repair and ready the home for listing and sale. I further made an Order for the listing and sale of the matrimonial home. Lastly, I made an Order regarding disclosure as requested by the Applicant. The parties returned to court in July 2022 regarding enforcement of my Order to sell the matrimonial home. Vallee J. found that the Respondent had not complied with the Order of October 1, 2021. The Applicant requested a receiver be appointed, and Vallee J. ordered it. On August 9, 2022, Vallee J. made an Order that a receiver be appointed pursuant to s. 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43, to carry out all aspects of the sale of the matrimonial home. Now, almost 1.5 years after my Order dated October 1, 2021, the matrimonial home remains unsold.

[4] The Respondent is self-employed and owns and manages a construction company operating under the name Landmark Construction Renovations and Restorations (“LCRR”). LCRR’s only client is a family trust, namely Simcoe Group Trust (“SGT”). As summarized in my decision dated October 1, 2021, the Respondent is the trustee of SGT which owns and manages several residential and commercial properties. The Applicant states that the Respondent acquired these properties throughout their relationship and then, prior to their marriage, the Respondent transferred all of his assets (except for the matrimonial home) to SGT. Simcoe Group Trust was created approximately five years prior to the party’s marriage. The only beneficiaries of SGT are three of the Respondent’s children, namely Christopher, Joshua, and Alex. This excludes Richard Maciel, the Respondent’s eldest son from his first marriage.

[5] The Applicant has significant concerns that by virtue of the close connection between SGT and LCRR, SGT is in fact the Respondent’s family business and his only source of income. She suspects the Respondent has dealings with SGT because she believes he is using the trust for his own benefit and to protect his wealth by effectively decreasing his income and NFP. She believes that any and all disclosure related to SGT is relevant to determine the Respondent’s income for support purposes as well as his net family property for equalization purposes.

[6] During the Applicant’s questioning of the Respondent, the Applicant states that the Respondent was vague in his answers about his income, as well as certain financial questions and transactions of SGT. The Respondent effectively deferred to his son, Richard Maciel, and his accountant, Terry Papadacos, as being better able to answer some of the questions.

[7] The Applicant’s motion seeks an order for the following:

(a) Requiring the non-parties, namely Richard Maciel and Terry Papadacos, to deliver disclosure and explanations as requested by the Applicant in her counsel’s letter, dated December 23, 2022, located in Exhibit “E” of the Applicant’s Affidavit, sworn February 17, 2023, and as listed in the Applicant’s Notice of Motion. (b) Granting the Applicant leave to question the non-parties, namely Richard Maciel and Terry Papadacos. (c) Removal of the matter from the May 2023 trial sittings in the Superior Court of Justice, Barrie Ontario.

[8] The Respondent and the non-parties are opposed to the Applicant’s motion. They ask for an order dismissing the Applicant’s motion.

Decision

[9] For the reasons set out below, the Applicant’s motion for disclosure from and leave to question Richard Maciel and Terry Papadacos is dismissed. The Applicant’s motion requesting the removal of this matter from the May 2023 trial sittings is also dismissed.

Discussion and Analysis

[10] Rules 19 (11) and 20 (5) provide for the production of documents in a non-party’s control and questioning of a non-party. Rule 19(11) says the following:

DOCUMENT IN NON-PARTY’S CONTROL - If a document is in a non-party's control, or is available only to the non-party, and is not protected by a legal privilege, and it would be unfair to a party to go on with the case without the document, the court may, on motion with notice served on every party and served on the non-party by special service,

(a) order the non-party to let the party examine the document and to supply the party with a copy at the legal aid rate; and (b) order that a copy be prepared and used for all purposes of the case instead of the original.

[11] Rule 20 (5) says the following:

ORDER FOR QUESTIONING OR DISCLOSURE - The Court may, on motion, order that a person (whether a party or not) be questioned by a party or disclose information by affidavit or by another method about any issue in the case, if the following conditions are met:

1. It would be unfair to the party who wants the questioning or disclosure to carry on with the case without it.
2. The information is not easily available by any other method.
3. The questioning or disclosure will not cause unacceptable delay or undue expense.

[12] While r. 19(11) and r. 20 (5) are worded differently, the caselaw demonstrates that they are applied relatively similarly. The questions before this court for this motion are as follows: Is it fair, under the circumstances of this case, for the Court to order these non-parties to produce the disclosure requested by the Applicant and to grant the Applicant leave to question these non-parties? Is the information easily available by any other method? Will an Order for disclosure or granting leave for questioning cause unacceptable delay or undue expense?

[13] The Applicant is very concerned and suspicious that all the Respondent’s assets and income and the trust are comingled for his own benefit and others. She suspects that the Respondent did this to absolve him from potential creditors and from family law claims such as the Applicant’s and the wives or future wives of the Respondent’s children. The Applicant states that the Court should grant the relief she requests because the disclosure and questioning from the non-parties is relevant to the issues of equalization and support. She claims it is unfair under the circumstances of this case for this matter to proceed to trial without the requested disclosure and questioning because the disclosure may help determine whether SGT is a sham trust and whether the value and/or income of SGT should be included in the Respondent’s NFP and/or income. The Applicant states she needs the disclosure to help in addressing the concerns about the Respondent’s dealings with SGT as there is a legitimate concern that the Respondent is using the trust to protect his wealth and income, and without that information the Applicant will be deprived of the ability to prove the Respondent’s NFP and income. The Applicant’s theory is that the Respondent acquired and owned the properties during the parties’ relationship and effectively decreased his NFP (that could be in the millions) by transferring all of his assets into SGT. She states that this unfairness is coupled with the facts that the Respondent may be entitled to a date of marriage deduction, and, in addition, he encumbered the matrimonial home with a $975,000 loan to SGT.

[14] The Applicant concedes that significant disclosure has been provided by the Respondent. However, the Applicant states that all disclosure from the Respondent has either been made late, sporadically, or on the eve of conferences and/or motions. Additionally, the Applicant states that during questioning of the Respondent, a key theme strongly emerged. Many of the inquiries relating to SGT’s specific transactions and SGT’s liabilities were met with vague responses, and/or the Respondent deferred to his son, Richard, or his accountant as being better able to answer. On December 23, 2022, the Applicant’s counsel drafted a letter that summarized all the requests to Richard Maciel and the accountant, Terry Papadacos. The Applicant received a response on January 30, 2023 by email from Ms. Melito’s office with a letter and a zip file with some documents in response to the request. It did not contain any explanations, nor did it include the letter from Richard Maciel which is attached to Exibit B of Richard Maciel’s Affidavit. So, the Applicant did not have the benefit of receiving a full response until Richard Maciel’s Affidavit, dated March 15, 2023, was served (effectively on the eve of the motion). In the March 15, 2023 Affidavit, the non-parties also responded to the Applicant’s additional requests that were included in her Notice of Motion, dated February 17, 2023, and Affidavit, sworn February 17, 2023.

[15] Even though the Applicant concedes that the non-parties have provided some disclosure and answers to her questions, she states that further disclosure and questioning of Richard Maciel is relevant and necessary because she suspects that Richard Maciel is much more involved in the inner workings of SGT than is being admitted. The Respondent himself stated that he relies on Richard Maciel to administer SGT affairs. The Respondent admitted that Richard Maciel provides assistance to the Respondent and this is what “they do together.”

[16] In Richard Maciel’s Affidavit, dated March 15, 2023, he stated that he assists the Respondent with “managing” certain details of SGT “but not in any official capacity.” Richard Maciel stated that he has signing authority on the SGT trust account “for convenience only.” He says his father, the Respondent, is “not involved in the intricacies of any transaction.”

[17] The Applicant suspects that since Richard Maciel is set to be the trustee upon the Respondent’s death, he has a vested interest in SGT and he has an interest in growing the trust and increasing the income. She suspects that Richard Maciel has clear and significant involvement in the management of the trust because the Respondent clearly said that he doesn’t understand the trust’s workings and that he defers to Richard Maciel, his accountant and his lawyers.

[18] The Applicant states that she requires questioning of the accountant, Mr. Papadacos, so that he can explain the details of SGT’s budget each year. Mr. Papadacos files the income tax returns for both Richard Maciel and the Respondent. The Applicant suspects that their personal expenses are possibly going through SGT. The Applicant submits that out-of-court questioning of these two individuals (who are on the witness list) may help to shorten the length of the trial which is currently estimated to be at least five (5) days.

[19] The Applicant submits that, since the Respondent has clearly stated that he doesn’t understand the trust’s workings and he defers to Richard and the accountant, she was left with no choice but to bring a motion for third party disclosure and questioning. Within this context, the Applicant submits that it is unfair for her to carry on with the case without the requested non-party disclosure and questioning.

[20] The Respondent and the non-parties both state that the Applicant has not met the test for non-party disclosure or non-party questioning. The non-parties state that they have answered all of the Applicant’s requests for disclosure in the letter, dated January 30, 2023, and in their Affidavit, dated March 15, 2023. In fact, the Applicant did concede during the motion that the non-parties have provided answers to her questions, and they have provided substantial disclosure, albeit late.

[21] In the context of the issues of disclosure and questioning, the importance of fairness to all parties and proportionality cannot be minimized. As Perell J. stated in Boyd v. Fields, at para. 12:

Full and frank disclosure is a fundamental tenet of the Family Law Rules. However, there is also an element of proportionality, common sense, and fairness built into these rules. A party’s understandable aspiration for the outmost disclosure is not the standard. Fairness and some degree of genuine relevance, which is the ability of the evidence to contribute to the fact-finding process are factors. I also observe that just as non-disclosure can be harmful to a fair trial, so can excessive disclosure be harmful because it can confuse, mislead, or distract the trier of fact’s attention from the main issues and unduly occupy the trier of fact’s time and ultimately impair a fair trial.

[22] The court in Weber v. Merritt, 2018 ONSC 3086, at paras. 29-39, set out the factors to consider for an order for disclosure against a non-party, as summarized below:

(a) The onus on a motion for non-party disclosure is on the moving party; (b) The starting point is to consider the context, and the purpose for which the Rule is invoked; (c) The test under Rule 19(11) is an objective test, which requires an analysis outside the litigant's belief system: “suspicion and conjecture will not suffice”; (d) Rule 20(5) has been held to be more permissive than the comparable Rule in the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, but, as with all disclosure requests in the family law context, whether from parties or non-parties, while full and frank disclosure is a fundamental tenant of the Family Law Rules, “there is also an element of proportionality, common sense, and fairness built into these rules.” (e) The test for compelling third-party disclosure must be supplemented to take into account two critical values, privacy and proportionality…privacy interests of third parties must be carefully balanced against the interests of the parties in the proceeding”; (f) Non-parties are generally protected from potentially intrusive, costly, and time-consuming processes of discovery except in circumstances specifically addressed by the Rules; (g) The discovery process must be kept within reasonable bounds; and, (h) There must be an evidentiary basis to show that the documents sought are relevant. The request for disclosure from a non-party and the request for questioning should not amount to a fishing expedition. Disclosure is not a weapon and is not intended to overreach.

[23] In Santilli v. Piselli, 2010 ONSC 2874, McGee J. dismissed the wife’s motion for disclosure from the husband’s mother, a non-party to the case, because the extensive inventory of business documents sought from the husband’s mother was already mainly provided by her on a voluntary basis. Similarly, in this case, the non-parties have already provided some disclosure, as well as affidavit evidence, and they have stated that they do not have additional information to provide to the Applicant.

[24] The Applicant submits that the Respondent and the non-parties have been vague, and she is not satisfied with the answers and disclosure that have been provided. However, whether the answers are vague, or whether the Applicant is satisfied with the disclosure and/or answers provided by the non-parties, is not the test on this motion. The Applicant’s suspicions and/or impressions do not equal relevance.

[25] The purpose of questioning and disclosure is not to satisfy the suspicions and speculation of the Applicant. We must avoid a “fishing expedition.” During the motion, the court asked counsel for the Applicant to specify what disclosure they still required that wasn’t already answered in the January 30, 2023 letter or March 15, 2023 Affidavit. The court was frankly surprised by the shortness of the list. It would seem that substantive disclosure has been provided. The non-parties have voluntarily responded in writing and state that if the documents were available, they have been produced. They further stated that there are some documents that are not available given the passage of time.

[26] The non-parties have voluntarily responded in writing and by way of affidavit to the Applicant’s questions and her requests for disclosure. Questioning as an exercise is more time consuming than the provision of a document. Given the expressed statutory concern with respect to expense and delay, and the concepts recognized within the primary objective in R. 2, there has to be an evaluation of the utility and proportionality of allowing for further disclosure and questioning and, in my view, the inevitable resulting delay in the trial: see Boisvert v. Boisvert, at para. 61.

[27] The purpose of r. 19 (11) and 20 (5) is to provide relevant disclosure, not to provide a right to cross-examine a potential witness before trial. The onus is on the Applicant to prove that the disclosure and questioning is necessary.

[28] In my view, neither test has been met for further non-party disclosure and/or questioning. In this case, the non-parties have provided answers to the Applicant’s questions and provided her with documentation as well. The non-parties will be witnesses in this case. As the non-parties will be testifying at trial, the court does not view it as unfair to the Applicant to continue with the case without further disclosure and/or questioning. Lastly, oral questioning will be onerous and expensive and, in my opinion, cause unnecessary delay.

[29] The Court should not exercise its discretion to order questioning unless the three-part statutory test is “clearly met.” Questioning is not automatic and should be the approach of last resort. It should not be attempted until all reasonable requests for documentary disclosure have been attempted and exhausted: see Zafir v. Diamond, at paras. 19, 22, and 24-25. From my perspective, the Applicant has failed to meet the three-part test.

[30] In many ways, disproportionate and/or excessive disclosure can be just as bad as non-disclosure; however, enough is enough. The parties need to get on with the trial and ask all the questions of the witnesses at the trial. Both parties must stop the delays and using disclosure as a weapon, both of which may unreasonably increase the costs and delay the final adjudication of the matter on its merits.

[31] While I understand the Applicant is suspicious and distrustful of the Respondent, it is my belief that more motions for disclosure and/or questioning will not help achieve a resolution. Given the level of suspicion and distrust, the chance that the Applicant will ever be satisfied with the disclosure provided by the non-parties and/or answers given during questioning of the non-parties is low. The chance of the Applicant and Respondent negotiating a settlement or shortening the trial is even lower.

[32] If there is such nefarious wrongdoing, as suspected by the Applicant, the best place to have it assessed is at trial. If any or all of the Applicant’s suspicions are accurate, the findings that she requires will need to be made at a trial. Findings of relevance, credibility, delay, adverse inferences, and unconscionability can be made at the trial. At a trial, the court may also make findings that a party has not been following the Rules and/or has been non-compliant with court orders. If any of these findings are made, there are many serious consequences available to be imposed by the court.

[33] In my view, there is a prejudice to both the parties and the children if there is any further delay to the trial. The parties have been separated since 2019 and the litigation began in 2020. The parenting issues must be resolved. The matrimonial home remains unsold. The Applicant and Respondent cannot resolve the issues outside of court. It is absolutely unacceptable that there has been non-compliance with Orders and that so little progress has been made. The family needs closure to enable them to move forward. The trial must proceed in order to achieve some finality.

[34] The request to delay the trial has already been adjudicated. McCarthy J. has stated in his Endorsement, dated November 1, 2022, that the “TMC is adjourned to May 9, 2023 at 9:30 a.m. and the trial is adjourned to the May 2023 sittings when called and subject to the availability of counsel.”

[35] For all the reasons set out above, Order to go, dismissing the Applicant’s motion for disclosure and questioning of non-parties, and for adjournment of the trial.

[36] The Respondent and non-parties were successful on this motion and may be entitled to costs, pursuant to R. 24 of the Rules. If counsel cannot agree on costs, I will receive written submissions on a 7-day turnaround, commencing with the Respondent and non-parties on April 21, 2023, followed by responding submissions on or by April 28, 2023, then reply submissions, if any, on or by May 5, 2023. Cost submissions shall be no more than 2 pages in length (12 pt. font size, regular 1-inch margins, 1.5 spacing), exclusive of any costs outline or offers to settle. All costs submissions shall be delivered via email through my judicial assistant at barriejudsec@ontario.ca. If no submissions are received on or by May 5, 2023, the issue of costs will be deemed to have been settled between the parties.

R. S. Jain Date: April 13, 2023