Court File and Parties

NEWMARKET COURT FILE NO.: FC-17-54169-00 DATE: 20230501 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Jawad Nisar Nayaik Applicant – AND – Kiran Nayaik (Khemlall) Respondent

Counsel: Self-represented (for the Applicant) C. van Wirdum/K. Zarcone-Beam (for the Respondent)

HEARD: April 19, 2023

Ruling on Motion

Jarvis J.

Endorsement

1The respondent (“the mother”) has brought a motion to strike the pleadings of the applicant (“the father”) for alleged non-compliance with six Orders for financial disclosure and for leave to proceed with an uncontested trial. Issues involving parenting of the parties’ three children were resolved on April 13, 2023, and a final Order was made then by MacPherson J. The unresolved issues involve equalization of the parties’ net family properties and support (child and spousal). The father says that he has substantially complied with all the Orders and has provided explanations why certain documents could not be produced. The mother disagrees.

2If the father’s pleadings are struck, an uncontested trial on financial issues will proceed; otherwise, a three-day trial will be held during the forthcoming May sittings of the court. Until the final parenting Order was made, this case also involved a high conflict parenting dispute in which the Office of the Children’s Lawyer was involved.

The Orders

3The following are the relevant disclosure Orders:

(a) Order of Douglas J. dated April 8, 2019; (b) Order of Douglas J. dated July 8, 2019; (c) Order of McGee J. dated October 20, 2019; (d) Order of Douglas J. dated December 9, 2019; (e) Order of Bennett J. dated February 3, 2021; and (f) Order of Himel J. dated September 22, 2021.

4In some cases, the Orders repeated the earlier disclosure ordered.

5The motion before this court (the same as or similar to several previous motions by the mother to strike the father’s pleadings) was started by her in early February 2023 and was returnable on March 8, 2023. On that date the matter came before Bennett J. The father had filed nothing in response to the motion and sought an adjournment. He appeared with an agent (a former solicitor of record) who represented that her review of the father’s disclosure suggested that he had complied with his disclosure obligations and that her client needed an adjournment to deliver an affidavit to that effect. Bennett J. granted the request and adjourned the motion to a date later set by the trial coordinator for April 19, 2023. The father was ordered to deliver his affidavit by March 22, 2023. He did not comply with this term of the Order.

6A combined Settlement and Trial Scheduling Conference was held on April 11, 2023. The father filed nothing for this event. The conference was continued on April 13, 2023 (this is when the parties settled their parenting issues). A Trial Scheduling Endorsement was made that day by MacPherson J. who noted the mother’s pending motion to strike the father’s pleadings and commented that the father’s behaviour in not following court Orders was “unreasonable litigation behaviour”.

7The father eventually delivered an affidavit sworn on April 14, 2023, well past the deadline ordered by Bennett J. This left the mother with little time to deliver a reply affidavit, which she was able to swear on April 18, 2023 and which this court permitted to be filed. The father’s affidavit referenced disclosure forwarded to the mother’s lawyer by email on March 23, 2023. In her reply, the mother pointed out the father’s failure to follow up his requests to third parties (such as banks) and his three-year delay in producing the Income Report that Douglas J. ordered on December 9, 2019, be provided by February 7, 2020, but which was not delivered until February 22, 2023. According to the mother, the father’s “explanations of why disclosure is outstanding do not equate to compliance with the Orders or best efforts to obtain that disclosure.” [1] She has a point.

Outstanding Disclosure

8The mother appended to her reply affidavit an updated list of outstanding disclosure (“the Disclosure List”) that included the disclosure sent by the father on March 23, 2023. The court will deal with each of the Orders and mother’s non-compliance allegations.

Order of Douglas J. dated April 8, 2019 (Settlement Conference)

9This Order required the father to respond to a Request for Information from the mother on a best-efforts basis within forty-five days. The Request was not in evidence before this court. The Disclosure List noted only that since the father had not complied with this Order further disclosure Orders were required.

Order of Douglas J. dated July 8, 2019 (Combined Settlement and Trial Scheduling Conference)

10The Disclosure List confirms that, except for modest child support arrears of $534.50 (about $1,257 when the motion was argued), the father had just provided the outstanding disclosure.

Order of McGee J. dated October 30, 2019 (Motion)

11In considering a motion by the mother which involved child support and disclosure, McGee J. noted in her endorsement that she had previously dealt with issues involving the father’s disclosure twice before (February 5, 2018, and October 9, 2018). The father did not object to producing the disclosure sought by the mother; the Order listed twenty-five categories of disclosure to be produced. The outstanding disclosure from this Order involves only five of those categories, namely:

(a) Supporting documentation from the father’s September 16, 2021, financial statement, including documentation disclosing his (then) current assets and his partner’s income; (b) Proof of all business income/sales for a company in which the father was a 50% shareholder, namely Wysdom Consulting Group Inc. (“WCGI”), and its related entities, from January 1, 2013, to the date of the Order, including a breakdown of all business expenses and deductions; (c) Copies of statements for a corporate line of credit and all personal and corporate credit card statements from January 1, 2013, to the date of the Order; (d) Copies of all statements for two identified bank accounts for the period from January 1, 2013, to December 31, 2017; (e) Copies of statements verifying telepayments made by the WCGI group in 2017 and 2018.

12Neither the mother’s evidence nor the Disclosure List inform the court when the balance of the disclosure of the other twenty categories was provided or whether and when she would have been satisfied with the father’s answers or explanations that the information was unavailable. This court has had to wade through the plethora of endorsements, Orders and (where appropriate) affidavits to piece together the disclosure (or, as it were non-disclosure) path and must infer that the father did comply with the preponderance of the disclosure ordered or that the wife accepted or chose not to further pursue disclosure of information involving those not listed above as outstanding. As noted below, the father still hadn’t satisfied the disclosure ordered dealing with his partner’s income at (a) and (c) to (e) above. Given his more recent disclosure the probative relevance of the disclosure referenced in (b) is dubious.

Order of Douglas J, dated December 9, 2019 (Combined Settlement and Trial Scheduling Conference)

13This Order required, among other things, copies of Notices of Assessment for WCGI as requested in a letter from the expert retained by the father to a third party (Sindhwani). It is unclear for what years the Notices of Assessment are requested.

14The father was ordered to deliver his business valuation by February 7, 2020. [2] It wasn’t.

Order of Bennett J. dated February 3, 2021 (Motion)

15The mother brought a motion to strike the father’s pleadings because he had not complied in producing the expert reports ordered by Douglas J. in December 2019. Bennett J. ordered the father to deliver the reports by March 17, 2021, and indicated that if the deadline could not be met by the father’s expert, then the court would be prepared to entertain a simple procedural motion (pursuant to Family Law Rule 14B) to extend the deadline, provided that a satisfactory explanation was provided.

16No expert reports were provided by the deadline. No 14B motion was brought by the father seeking an extension of time.

Order of Himel J. dated September 22, 2021 (Motions)

17Almost six months after the Bennett J. Order and well after the deadline had passed for delivery of his expert’s reports, the father sought an extension of time for delivery of his expert reports and the mother renewed her motion to strike his pleadings. It is clear from the court’s endorsement that Himel J. was exasperated with the father’s inaction, unreasonable delays and breach of, in particular, the more recent Order of Bennett J. The court was informed that the expert whom the father had retained was close to completing what the court was led to believe was a report dealing with the father’s business interests and an income analysis. [3] The parties consented to an Order requiring the father to answer the mother’s (then remaining) disclosure requests including the disclosure set out in the Order of McGee J two years before. The Disclosure List identified the following disclosure which had not been provided:

(a) Corporate tax returns for WCSI for which the father received draft 2018 and 2019 financial statements as he represented to the mother in November 2021; (b) The WCSI General Ledgers that the father said in September 2021 would be provided to his expert and the mother; (c) Records of an investment made by the father through WCGI in a downtown Toronto lounge (“Cabin”). The entire shareholders loan was written off by 2015. According to the father (as told to his expert) the entire investment was lost and there were no financial statements ever prepared; (d) A further direction for the father to follow up the bank information request at (c) to (e) of the McGee J. Order dated October 13, 2019 (as above); (e) Proof that the father’s corporations had ceased operating as of December 31, 2020; (f) Medical documentation verifying any inability to work due to illness or disability; (g) Copies of any applications made to the Canada Pension Plan, Ontario Disability Support Program or other illness of disability insurer; (h) The father’s most recent Record of Employment; (i) Confirmation of the father’s enrollment in an educational institution or course of study; (j) Proof of non-arm’s length third party payments allegedly made by the father’s mother to his partner for his and his family’s expenses in circumstances where the father was maintaining that he was earning nothing or very little, but his partner was earning $125,000 a year.

18Himel J. scheduled a December 16, 2021, court date to address what were, at that time, the remaining parenting and disclosure concerns either by way of a settlement conference or another motion to strike the father’s pleadings. Whatever the event, the court indicated that a May 2022 trial date was targeted.

19The father responded to the disclosure ordered in mid-November 2021. He advised that WCGI had ceased operations in 2019, it did not operate in 2020 and that the supporting documentation for WCGI’s business relating to income and sales was unavailable because the father and his business partner were evicted from the company’s office by its landlord in 2017. The requested documents were stored in filing cabinets in the office to which the father swore that he no longer had access. The father then started another, similar, company, Wysdom Care Solutions Inc (“WCSI”), in 2017 but it wasn’t successful and ceased operations in 2019. The father described what he was able to obtain and produce relating to the affairs of his businesses.

20The father also delivered a business valuation report dated November 15, 2021. It was a Calculation Valuation report. The estimated value of the father’s pro-rated (50%) business interest was $13,116 but that value reflected a substantial shareholders’ loan to the father and, to a lesser degree, to his business partner which, if not collected, would leave the company in “a significant deficit position”. It is not unreasonable to infer that the loan was not then, and is not now, collectible.

21The mother has described the expert’s report as “inadequate” because the opinion was extensively qualified. The expert outlined the reasons for qualifying his opinion and identified what further information he needed from the father. There is no evidence that the father made any effort to provide to his expert this additional information. The father explained to this court that the missing information mostly related to analyzing his income. There is nothing from the father’s expert corroborating this explanation: the business valuation opinion has not been updated.

22No income report was produced by the husband until late February 2023 shortly after the mother brought this motion.

Current Motion to Strike Pleadings

23In his affidavit filed on the eve of this motion the father answered much of the outstanding disclosure ordered and provided explanations for what couldn’t be provided. Even so, the father did not directly answer (d) to (j) of the Himel J. Order except to baldly assert that he has used his “best efforts to produce all of the financial disclosure that was ordered to be produced” (paragraph 21) and that he had not enjoyed “a steady income since 2019 due to personal issues” (paragraph 24). These answers are disingenuous. For example, while the father sent emails in November 2021 to his and his companies’ bankers for copies of the account statements listed at (c) to (e) of the 2019 McGee J. Order (and (d) of the Himel J. Order as noted), there is no evidence that he ever followed up with this request. With respect to his income-earning challenges since 2019, the mother and this court are left to speculate about the “personal issues” that impact his earning ability. He didn’t elaborate when the motion was argued.

24There is no evidence that the father has disclosed his partner’s income.

Discussion

25Striking a party’s pleading does not, ipso facto, relieve the party obtaining that relief from having to affirmatively prove their case at trial. That is the dilemma when dealing with complaints about financial non-disclosure in family law cases: at what point is the deficient disclosure probatively just enough to enable the court to reach a conclusion that will avoid “factual errors giving rise to an injustice, which will erode confidence in the justice system”. [4] In Kovachis, the Court of Appeal observed that the rationale for striking a pleading only in exceptional circumstances was “obvious”,

…Without one side's participation in the trial, there is a risk the court will not have either enough information or accurate information to reach a just result. If the judgment provides for continuing obligations that can only be varied on changed circumstances, as many family law judgments do, the injustice may be perpetuated. [5]

26In her factum, the mother referred the court to a number of decisions well-known to this court highlighting the impact on innocent parties and the administration of justice of behaviour by litigants who not only fail to make proper financial disclosure but also who have been given repeated opportunities/indulgences by the court to comply. [6] There is no question in this case that the father has had plenty of opportunity to comply with the Orders made, that he has been less than pro-active in his efforts and often less than forthright. At least four different judges and at least seven court events spanning a five-year period have involved financial issues in this case and the father’s disclosure obligations. He has failed to comply with deadlines, repeatedly appeared at court without filing responding material and at least twice engaged a lawyer at the last moment to appear on his behalf to seek an adjournment. In the motion before this court the father has quite clearly failed, without reasonable explanation, to comply with paragraphs (d) to (j) above from the Himel J. Order. Viewed overall, the father’s litigation behaviour echoes what Myers J. in Manchanda v. Theti [7] and the Court of Appeal more recently in Aslezova v. Khanine [8] declared amply warrants the father’s pleadings in this case being struck.

27But the father has now provided substantial, though not perfect, disclosure. For example, he provided in mid-November 2021 (as noted) a valuation of his business interests, albeit a Calculation Value report (the lowest level of reader assurance) and, more recently in late March 2023, an income analysis, although both well beyond court-ordered deadlines. The mother disputes the adequacy and reliability of the information provided by the father to his expert and disagrees with the conclusions contained in the reports. However, when asked by the court whether the mother had engaged her own expert, her counsel advised that an expert was on “stand-by”, that there were on-going discussions with that person but that since there were disclosure deficiencies no opinion from that expert would be sought. Significantly, there is no evidence of any letter or other document from the mother’s proposed expert detailing fundamental missing disclosure that prevents her expert from delivering any kind of report or even a critique. There is no evidence either of the importance or materiality of the remaining items of disclosure not produced.

28In Kovachis the Court of Appeal observed that before pleadings are struck due to financial non-disclosure the court is required to consider the importance or materiality of the items of disclosure not produced. [9] The analytical framework is set out more expansively by the Court of Appeal in Mullins v. Sherlock [10] and obliges the court to contextualize the relevancy and impact of the non-disclosure, the complexity of the issues in dispute, the extensiveness of the disclosure produced and the seriousness of the defaulting party’s efforts and explanations for the inadequate or non-disclosure. Other factors may be relevant too.

29In fashioning a remedy appropriate to the facts, the Court of Appeal in Mullins required the motions judge to particularize the pleadings being struck and contextualize the non-disclosure. All the husband’s pleadings (including his affidavits) in that case were struck but he was entitled to notice of all future steps in the proceeding, attend as an observer and, with respect to any trial, allowed to make opening and closing statements and to cross-examine the wife and her witnesses, all subject to the discretion of the presiding judge. The husband was not allowed to initiate any step in the proceeding such as a motion.

30In this case the following considerations are relevant:

(a) The father has repeatedly failed to provide his disclosure in a timely and responsive way, as required by the Family Law Rules and successive Orders of the court, for over four years; (b) He has no satisfactory explanation why he failed to provide additional information to the expert who prepared his business valuation so that the expert could reconsider the qualifications to his opinion; (c) He has failed to produce credit card statements and bank account records as ordered by McGee J. in 2019 and reaffirmed by Himel J. in September 2021 (see (d) above from the Himel J. Order); (d) He has failed to provide any medical evidence that would support his inability to work steadily for health reasons (see (f) of the Himel J. Order); (e) He has failed to provide any evidence that he applied for health or other disability insurance or undertook vocational training or pursued other education (see (g) and (i) of the Himel J. Order); (f) He has failed to provide any Record of Employment (paragraph (h) of the Order); (g) He has failed to provide disclosure of non-arm’s length third party payments allegedly made by his mother to his partner for his and his family’s support and failed to provide evidence relating to his partner’s income; (h) Although late, the father has produced a business valuation and an income analysis, both reports prepared by an expert having a Certified Business Valuator accreditation and who signed a Form 20.2 Acknowledgement of Expert’s Duty. He has also produced a substantial amount of other corporate disclosure and answered many questions, although the mother is dissatisfied with his efforts and explanations.

31With respect to some of the father’s remaining non-disclosure the court can draw adverse inferences at a trial. As for other non-disclosure, such as obtaining bank records (how difficult is that?) or disclosing third party payments to him or on his behalf (such as child support) by his mother and the partner with whom he lives, it is this court’s view that the father is deliberately refusing to comply. This non-disclosure is particularly egregious because not only did he not object to producing this information three and a half years ago (the October 2019 Order of McGee J.) but also because the probative value of this information to his proposed expert’s evidence and his support-paying ability risks not being fairly ascertained. The father is not an unintelligent litigant.

Disposition

32The procedural history of this case is a perfect example why, as observed by Myers J. in Manchanda, there needs to be a culture shift in cases involving deferred disclosure, delayed disclosure and non-disclosure. [11] What the court permits, it promotes. In Bahous v. Bahous [12] this court adverted to the court’s little used (or reported) discretion pursuant to Family Law Rule 20.3 to appoint an expert “on its own initiative” in appropriate circumstances. Perhaps that more aggressive approach should have been considered in early 2020 when the father failed to meet the deadline for producing his expert reports. Like Bahous though it is too late, on the eve of a proposed trial in this case, to make such an Order.

33Given the totality of the disclosure provided by the father to date, however late and however described as unsatisfactory by the mother, this court cannot strike his pleadings, but it can provide further directions for the trial and leave it to the trial judge to determine the extent of the father’s participatory rights.

34The following is ordered:

(a) The father shall produce to the mother by May 11, 2023, the disclosure ordered by McGee J. on October 30, 2019, except that the date from and after which the disclosure is to be provided is January 1, 2017. The father shall also be required to provide to the mother by May 11, 2023, full copies of his partner’s income tax returns from January 1, 2017, to date (i.e., including the 2022 tax year) and a list of all third-party payments made to him, whether by loan or gift, which assisted him in paying support and meeting his daily expenses; (b) If the father fails to fully comply with (a) then it will be for the trial judge to determine the extent of the father’s participation at trial; (c) Pending the start of trial, the father shall not be entitled to initiate any step in this proceeding; (d) The trial shall proceed during the May sittings of this court.

35The father may protest the proximity of the May 11, 2023, compliance deadline but he agreed to obtaining and producing this information four years ago. As for disclosure of his partner’s income tax returns the father agreed to this disclosure then too: the court notes that she is identified as one of his proposed witnesses at trial anyway.

36As for costs, the mother has submitted a Bill of Costs covering the period from November 28, 2022, to April 19, 2023, for full recovery costs of $28,475.44 comprising her lawyer’s fees ($25,199.50) and HST ($3,275.94), no disbursements, and $17,085.26 on a 60% partial recovery basis. The Bill details the date and time spent for legal services (two lawyers, one law clerk), their hourly rate and experience. The hourly rates are reasonable as are the explanations of the work performed. During this period the mother’s legal team reviewed the father’s disclosure and correlated it to the court’s many Orders, providing (and at the last-minute updating) a Disclosure List. The mother had little choice but to bring her motion in March 2023, which led to further disclosure from the father. Her lawyers had to scramble at the last minute to deliver her reply to the father’s material when he ignored yet another filing deadline and delivered his responding affidavit on the eve of this motion. No family law litigant should have to tolerate the kind of litigation behaviour demonstrated by the father in this case.

37In Miziolek v. Miziolek and Miziolek [13] A.J. Goodman J. observed that,

…[t]here must be practical and reasonable limits to the amounts awarded for costs and those amounts should bear some reasonable connection to the amount that should reasonably have been contemplated. I note that it is not necessary for me to have to go through the hours, or disbursements, line by line, in order to determine what the appropriate costs are. Nor is the court to second-guess the amount of time claimed unless it is clearly excessive or overreaching. I must consider what is reasonable in the circumstances, and all the relevant factors. However, when appropriate and necessary, a court ought to analyze the Bill of Costs in order to satisfy itself as to the reasonableness of the fees and expenses submitted for consideration.

38In reviewing the mother’s Bill, several of the services involved research with respect to striking pleadings, reviewing caselaw, reviewing the father’s disclosure (which would have been necessary in any case to proving the mother’s claims at trial), discussions between the lawyers and between them and the law clerk (for which claims were made for both professionals involved) and $4,300 for a factum (not required for a regular one hour motion in Central East Region) which included caselaw with which all judges of this court are, unfortunately, far too familiar.

39The Bill of Costs indicates that an Offer to Settle was prepared by the mother but the timing of that appears to relate to the combined Settlement and Trial Scheduling Conference held by MacPherson J. on April 11, 2023, and not to the mother’s motion to strike. While not successful in her motion, it is the court’s view that in all the circumstances of this case she is entitled to costs but not in the amount claimed. Considering the factors set out in Family Law Rule 24, the delay in this case (almost entirely attributable to the father), the expense to which the mother has been unfairly and unreasonably put and to express its displeasure with the father’s litigation conduct it is appropriate the father pay to the mother all-inclusive costs of $15,000, this amount to be enforceable as a support Order. A support Deduction Order shall issue.

40Approval of the Order by the father is dispensed with. A draft of the proposed Order and Support Deduction Order may be forwarded to the judicial assistant for timely issuance.

Justice D.A. Jarvis Date: May 1, 2023

Footnotes

[1] Paragraph 17 of the mother’s affidavit sworn on April 18, 2023. [2] It is unclear from the endorsement whether the expert was to also provide an Income Analysis but that is inferentially likely from the previous court endorsements. See, for example, paragraph 12 of the later endorsement of Himel J. [3] Himel J. referenced “the CBV report” in the context of both components of the expert’s engagement. [4] Purcaru v. Purcaru, 2010 ONCA 92 at para. 49. [5] Kovachis v. Kovachis at para. 25. (Note: This refers to Purcaru v. Purcaru, 2010 ONCA 92) [6] Levely v. Levely, 2013 ONSC 1026 at paras. 13 and 14; Ferguson v. Ferguson, 2022 ONCA 543 at paras. 30 and 32. [7] Manchanda v. Theti, 2016 ONSC 3776; aff’d 2016 ONCA 909. [8] Aslezova v. Khanine, 2023 ONCA 153. [9] Kovachis at para. 34. (Note: This refers to Purcaru v. Purcaru, 2010 ONCA 92) [10] 2018 ONCA 1063 at paras. 44-49. [11] Manchanda at para. 75. (Note: This refers to Manchanda v. Theti, 2016 ONSC 3776) [12] 2023 ONSC 1580 at para. 11. [13] 2018 ONSC 4372, at para. 32.