Court File and Parties

COURT FILE NO.: FS-20-20649 DATE: 2024-07-15 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Galit Altman, Applicant AND: Yoel Altman, Respondent

BEFORE: M. Kraft, J.

COUNSEL: Julie K. Hannaford and Angela Pagano, for the Applicant Darrel S. Waisberg, for the Respondent

HEARD: July 2, 2024

Endorsement

M. Kraft, J.

Nature of the Motion

[1] The applicant, Galit Altman (“Galit”), brings a motion under rule 1(8) of the Family Law Rules, O. Reg. 114/99 (“FLRs”) to strike the pleadings of the respondent, Yoel Altman, (“Yoel”) because of his ongoing breaches of the court orders. Specifically, Galit submits that Yoel is in breach of the orders of Faieta, J., dated October 5, 2021; November 12, 2021; and December 14, 2021 (“the 2021 Faieta Orders”). The 2021 Faieta Orders, among other things, deal with Yoel’s financial disclosure obligations, a preservation order over Yoel’s assets and parenting.

[2] This is a high conflict case involving a significant amount of money. Galit has submitted that she is entitled to an equalization payment (“EP”) of about $17 million to $19 million. To date, Yoel has been ordered to advance to Galit $7,975,007.60 towards the EP. The parties have been in litigation since 2020. Over 24 Endorsements have been made by judges of this court. In addition to having a case management judge hearing conferences a case management judge has also been assigned to hear motions in this matter. This is not the first motion brought by Galit to strike Yoel’s pleadings due to his non-compliance of court orders.

[3] By way of brief factual background: a) The parties were married for 16 years. They have three children, ages 18, 15 and 11. The parties separated in July 2019. [1] b) The children reside with Galit in the matrimonial home in Toronto. She has not worked outside of the home since 2011 and is the primary parent. c) During the marriage, the parties lived an affluent lifestyle. They owned a matrimonial home in Forest Hill, travelled by private plane, sent their children to private Jewish day schools, purchased high-end clothing, were members of exclusive clubs, and employed a full-time nanny. [2] d) Yoel is an entrepreneur, involved in financing high growth companies in biotechnology, technology, e-sports and real estate. In March 2020, about 7 months after separation, Yoel moved to Bahamas and then Florida. He current resides in Florida full-time. e) Galit issued this application on December 14, 2020, in which she seeks an equalization of net family property, spousal support, primary residence of the children, sole decision-making responsibility for the children, child support, exclusive possession of the matrimonial home and a freezing of Yoel’s assets. f) Yoel served an Answer and Financial Statement on February 12, 2021. At that time, he was represented by Gary Joseph and had retained Steve Ranot as his Chartered Business Valuator to prepare an income report and a valuation report of his corporate assets. Yoel’s financial statement contained “TBD” for his income and for the value of each corporation he owned. g) On November 4, 2022, Yoel delivered his expert reports. His expert, Steve Ranot, opined that Yoel’s income for support purposes was -$10,240,00 in 2020 and -$13,790,000 in 2019, and that his assets, both personal and corporate, were worth just over $30 million on the date of separation. Galit’s expert, Timothy Martin, from Verity Valuation Group served a Request for Information (“RFI”) on Yoel in April 2023. Yoel has not complied with this RFI. h) Yoel’s money in Canada is held at Canaccord Genuity Corp. (“Canaccord”): See Altman v. Altman, 2021 ONSC 8218, at para 5. i) In this proceeding, Yoel has stated that by April 2023, the value of his personal assets have fallen since October 2021 by about $3.6 million to $9.2 million. Yoel further states that, during that same period, the net value of all of his assets (both personal and corporate) have fallen by about $10.5 million to $11.8 million. [3] j) On his May 20, 2022 financial statement, Yoel shows debts and liabilities of $4 million, $12.6 million in investment and other accounts, including about $5 million in an RRSP account. Yoel lists his net family property at $30.5 million, but this does not include the value of his interests in 2374879 Ontario Inc., 5048976 Ontario Inc., Grandhill Capital Inc. and 2390114 Ontario Inc.

Issues to be Determined

[4] The issues for me to decide are: a) Is there a triggering event - is Yoel in breach of any of the 2021 Faieta Orders, and/or his obligations under the FLRs? b) If the answer to (a) is yes, should I exercise my discretion to strike his pleadings or make another order set out in r. 1(8) of the FLRs?

Each Party’s Position on the Motion

[5] Galit submits that Yoel has breached the 2021 Faieta Orders by: a) disparaging and speaking ill of her to the children and discussing financial issues with them, contrary to paragraph 4 of the October 5, 2021 Faieta Order; b) failing to provide information about transactions or activities involving any assets of any kind, in accordance with his ongoing rolling disclosure obligation every 30 days, contrary to paragraph 12 of the October 5, 2021 Faieta Order; c) failing to provide her with financial and corporate records pertaining to his companies, contrary to paragraph 13 of the October 5 2021 Faieta Order, and d) failing to preserve property he held at the Bank of Montreal in a non-registered account ending in 552-14, by liquidating the sum of about $1,150,000 and diverting these funds into new accounts at the Bank of Montreal, which were used without disclosure of the newly opened Bank of Montreal accounts, contrary to paragraph 18 of the October 5, 2021 Faieta Order.

[6] Yoel’s obligations under the October 5, 2021 Faieta Order were reiterated in the two subsequent orders made by Faieta J. in November and December 2021. According to Galit, the disclosure has outstanding for a significant period of time and Yoel’s non-compliance of these orders have been the subject of previous motions to strike. Her position is that Yoel has had a multitude of opportunities to rectify his breaches and has failed to do so. As a result, she seeks to have Yoel’s pleadings struck and to proceed with this matter by way of an uncontested trial. Galit estimates that the trial will require about 2 days of viva voce testimony. She argues that she can rely on Yoel’s expert reports as to the value of his net family property and that the matter can proceed in Yoel’s absence.

[7] Yoel submits that Galit has not met her onus to demonstrate that he has breached any of the 2021 Faieta Orders. He claims he has made good faith efforts to comply with all of his disclosure obligations; he did not understand that he had a rolling disclosure obligation despite the language in the Order; and he has complied with the preservation order by only using funds that are necessary in the ordinary course of business, which he refers to as the “carve out provisions”, as set out in paragraph 18 of the October 5, 2021 Faieta Order. If, the court determines that he is in breach of the court orders, Yoel argues that striking his pleadings is not an appropriate remedy under r.1(8), given the complexity of his financial circumstances and what is at risk.

The Law

[8] The FLRs detail the consequences that may follow upon the party’s failure to obey a court order in a case. Rule 1(8) provides that:

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 a 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 the 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.

[9] A request for relief under Rule 1(8) entails the following three-step analysis as set out in KM v JR, 2024 ONSC 1338 at para 31: (i) The court must first determine if there is a triggering event. a. A triggering event exists when there has been non-compliance with a court order; b. There is no requirement that the violated order was made on a motion, and it doesn't matter who obtained the order; and c. As long as the court is satisfied that there has been a failure to obey an order "in the case or a related case" Rule 1(8) is triggered. (ii) If there has been a triggering event, the court should then determine whether it is appropriate to exercise its discretion in favour of the non-complying party by not sanctioning that party under subrule 1(8). a. The onus is on the non-complying party to show why it would be appropriate for the Court to exercise its discretion in their favour. b. This discretion should only be exercised in the non-compliant party's favour in exceptional circumstances. c. The court's decision as to whether or not to exercise its discretion in favour of the noncomplying party should take into account all relevant history of the litigation and, more specifically, the conduct of the non-complying party. (iii) If the court determines it should not exercise its discretion in favour of the non-complying party, it is then left with the very broad discretion as to the appropriate remedy under Rule 1(8). Relevant considerations include: a. The proportionality of the sanction to the wrongdoing; b. The similarity of sanctions in like circumstances; c. The presence of mitigating factors; d. The presence of aggravating factors; e. Deterrence

Is there a Triggering Event because Yoel has breached the 2021 Faieta Orders?

[10] In looking at the 2021 Faieta Orders, it is important to review the financial history between the parties and the nature of Yoel’s complex financial holdings. a) Yoel is currently carrying on business under his own name as well as under 2374879 Ontario Inc., 5078967 Ontario Inc., Grandhill Capital Inc. and 2390113 Ontario Inc. b) In 2009, Yoel established Sababa Consulting Inc. (“Sababa”). Galit had a 50% interest in the company. The remaining 50% is owned by Izhak Hinitz, a former friend of Yoel’s. Another company, Ateed, was set up by Yoel, also owned by Galit and Mr. Hinitz. Although these companies were established in Galit’s name, the transactions in which the companies were involved were controlled by Yoel. c) In June 2018, the Quebec securities regulator laid charges against Yoel and others, including Sababa, in relation to Amaya’s $4.9 million takeover of the parent company of online gambling website, PokerStars. Yoel was alleged to be an advisor to Amaya and faced six charges of insider trading and attempting to influence the market price of the securities of Amaya. In June 2018, the Quebec Superior Court ordered a stay of proceedings. Yoel has submitted in these proceedings that he incurred $6 million in legal fees to defend against these charges and suffered significant harm to his reputation. [4] d) As a result of these insider trading charges, it was difficult for Yoel to own or operate a bank account. Financial institutions such as RBC, HSBC and UBS Group AG would no longer deal with Yoel. As a result, in April 2016, Yoel and Galit set up an account in Galit’s name with Mandeville Private Client Inc., an investment dealer. In turn, on December 20, 2018, Galit signed a Continuing Power of Attorney appointing Yoel as her attorney for property and all investments, including any investments with Mandeville Asset Management. This gave Yoel authority over Galit’s finances. e) After the parties separated, Galit cancelled the Power of Attorney. She then learned that she had not filed a tax return for 2017, 2018 and 2019 and that Sababa has not filed any income tax returns since 2011. Galit faces income tax liability for funds withdrawn in 2017 by Yoel from Sababa as a shareholder loan and placed in a brokerage account in her name, all of which Yoel controlled. f) On August 8, 2023, Galit filed applications under the Voluntary Disclosure Program to the CRA on her behalf personally and on behalf of Sababa. Her Application states that she owes a total of $5,978,973.60 for the 2017-2022 tax years, inclusive based on the 2017 shareholder advance and income subsequently earned. Galit and Mr. Hinitz, being equal owners of Sababa, arranged for financial statements to be prepared for Sababa for the 2012-2023 years. This outstanding tax liability has been the subject of a number of orders made in this proceeding to enable Galit to pay off some of the taxes owing in her name and in the name of Sababa. g) Specifically, in Faieta, J.’s endorsement, dated January 5, 2024, he ordered Yoel to make an advance on the EP to Galit in the sum of $7,975,007.60, without prejudice to a further request for an advance in the event that the CRA imposes interest and penalties on Galit’s or Sababa’s income tax liability. Faieta, J. made the following findings of fact about this income tax liability: i) “the Respondent viewed the Applicant’s shareholder interest in Sababa as his own.” ii) “Nevertheless, by having the Applicant agree to accept his request to become a shareholder and officer of Sababa, and by having her execute a broadly worded power of attorney, he was able to move Sababa’s funds as if they without any tax liability.” iii) “Having created this tax liability mess for the Applicant, fairness dictates that an advance be made from equalization so that the Applicant can discharge the aforementioned tax liabilities.” [5]

[11] Although the income tax liability issue is not currently before me, it is relevant to understand the history since it is part of the contextual analysis when looking at the disclosure orders that have been made and Yoel’s compliance with them.

Litigation History

[12] In terms of the 2021 Faieta Orders, a review of the litigation history is important to provide the context for the disclosure orders that were made, which can be summarized below.

[13] In May 2021, at the first case conference, Pinto, J. awarded costs against Yoel for failing to produce reasonable financial disclosure. Galit was granted leave to bring a motion for financial relief, disclosure and the preservation of Yoel’s assets.

[14] On May 21, 2021, after numerous requests for financial disclosure from Galit’s counsel, Yoel’s counsel delivered some disclosure. On May 28, 2021, Galit’s Chartered Business Valuator, Tim Martin, delivered an affidavit in which he deposed that after reviewing the documents disclosed by Yoel the information is “largely incomplete and as a result, I am not able to determine the values of his business interests at the date of separation or calculate his income for support purposes.”

October 5, 2021 Order

[15] Galit brought a motion returnable on June 28, 2021, in which she sought parenting relief, an advance on support, financial disclosure and to retain an independent supervising solicitor to review the contents of the boxes in the matrimonial home. On October 5, 2021, Faieta, J. released his Endorsement (“October 2021 Order) and Yoel was ordered to: (1) pay Galit interim uncharacterized support in the sum of $1.7 million; (2) forthwith deliver any and all documents that he had produced to Steve Ranot and provide to Galit’s counsel on a concurrent and ongoing basis any further documents produced to Steve Ranot; (3) serve income and valuation reports from Steve Ranot within 20 days; (4) deliver a sworn affidavit to Galit’s lawyer within 30 days setting out (a) a complete corporate organization chart detailing the structure of his interests in all entities as at the date of separation and currently, including a comprehensive list of any officer/directorships he held at the date of separation or currently holds; (b) a comprehensive accounting of any and all transactions/activities in which Yoel had engaged while using the Power of Attorney he exercised over Galit’s finances and personal information; (c) any records/agreements for any transactions, including pending transactions of any kind for the period from July I, 2018 to the date of this order and on a continuing basis, every 30 days (“the reporting period”) [6] involving any assets, whether held directly, indirectly, legally, beneficially, or through a corporation, LLC, partnership, trust or otherwise that the Respondent has an interest in (the “Transactions”); (d) any records/agreements for any pending or recent past transactions in the reporting period involving any business in which Yoel has an interest, whether held directly, indirectly, legally, beneficially or otherwise (also, the “Transactions”); and (e) the contact information for any agents acting on the Transactions; (5) provide Galit with full access to, and make available to her, all financial and corporate records pertaining to any corporation, LLC, partnership, trust or any property in any jurisdiction in which the Respondent may have an interest, directly or indirectly, legally or beneficially as at the date of separation and subsequently. (6) appoint an independent supervising solicitor (“ISS”) to review the content of boxes in the matrimonial home and to release any documents that are not privileged; (7) be restrained from depleting, dissipating or in any way dealing with any and all assets belonging to him directly or indirectly and to preserve his assets except for (1) any transaction that occurs in the ordinary course of business; and (2) any payments that this court orders Yoel to make in this proceeding, including an order for the payment of spousal support and child support whether in lump sum form or otherwise, however, Yoel shall provide a strict accounting of same to Galit as and when requested. [7]

[16] In the October 2021 Order, Faieta, J. also made parenting orders such that the children were to reside primarily with Galit, she was to have final decision-making responsibility with respect to the children with Yoel’s input, neither party was to disparage or speak ill of the other or discuss any issues regarding parenting, child support, spousal support, or other financial issues between them with the children or in their presence; the parties were to use OFW; and the parties were to equally share the cost of a Parenting Coordinator.

The November 12, 2021 Order

[17] On November 5, 2021, Galit brought a motion seeking to strike Yoel’s pleadings, on which day, Faieta, J. ordered that her motion be adjourned to November 12, 2021 to allow Yoel to file a sur-reply affidavit. Faieta, J. also expanded Yoel’s disclosure obligations set out in the October 2021 order to require him to attach all statements of account from July 1, 2018 to the present for all accounts held directly or indirectly by him at any financial institution located anywhere in the world. Further, the preservation order was amended to permit Yoel to access his accounts for the specific purpose of paying costs orders, paying his legal team, paying his CBV and personal accountants, and the ISS, provided he gives Galit full details of all payments made and copies of the account statements from the institution on which any payments are dawn showing the making of such payments at the same that the payments are made. If any payments exceed $300,000, Yoel was to seek further consent of Galit or seek a further court order (the November 5th 2021 Order). Paragraphs 3 and 4 of the November 12, 2021 Order states:

3. The Respondent shall attach to his aforementioned affidavit all statements of account from July 1, 2018 to the present for all accounts held directly or indirectly by the Respondent at any financial institution located anywhere in the world, including Canaccord Genuity Corp., Mandeville Private Client Inc., Hampton Securities Ltd., Haywood Securities Inc., Scotia iTrade/Scotia Capital Inc., Manulife Investments, PI Finance Corp., IA Securities/IA Private Wealth, TD Canada Trust and HSBC Bank Canada;

4. Notwithstanding paragraph 18 of the order of Faieta, J. dated October 5, 2021, the Respondent Yoel Altman shall be permitted to access his accounts for the specific purpose of paying costs orders, paying his legal team in this matter, (presently MacDonald & Partners LLP), paying his chartered business valuators Marmer Penner (Steve Ranot) his business and personal accountants and solicitor Robert Centa (the ISS), provided that the Respondent shall provide the Applicant with full details of all payments made and copies of the account statements from the institution on which any payments are drawn showing the making of such payments at the same time that the payments are made.

December 14, 2021 Order

[18] On November 12, 2021, Galit’s motion to strike Yoel’s pleadings was heard by Faieta, J. Shortly before this motion was heard, Yoel delivered thousands of pages of financial records in an unorganized fashion. Specifically, he provided documentary disclosure on November 9, 2021, November 18, 2021 and November 19, 2021. On December 14, 2021, Faieta, J. released his Endorsement in which he declined to strike Yoel’s pleadings (“the December 2021 Order”). Faieta, J. gave Yoel a further runway, namely, a further 3 months to January 17, 2022 to comply with his two prior orders. Specifically, by January 17, 2022, Yoel was ordered to: (a) deliver an affidavit providing the particulars of all accounts held directly or indirectly by him at any financial institution located anywhere in the world at any point in time since July 1, 2018; (b) comply with the Orders of October 5, 2021 and November 12, 2021; (c) prepare and provide to Galit, an index of the documents he has delivered to her; (d) prepare and provide to Galit, an affidavit describing the documents he has not yet delivered to her in accordance with the October 5, 2021, November 12, 2021 orders and what steps he has taken to comply with those aspects of the Orders; (e) pay for the cost of Galit having to organize and index the documents he has produced and delivered pursuant to the Orders on a full indemnity basis; (f) direct Steve Ranot to deliver a sworn affidavit by December 24, 2021, detailing the documents provided to him by Yoel; and (g) Galit was granted leave to question.

[19] On June 6, 2022, at a conference, Diamond, J., ordered on consent that $1,010,000 be released from the frozen funds at Canaccord to allow Galit’s lawyer to hold $505,000 in trust to be applied toward her CRA liabilities and for Yoel to receive $505,000 to allow him to pay the CRA as assessed. Justice Diamond was assigned to be the case management judge and he appointed Faieta, J. as the judge who to hear motions.

[20] On June 28, 2022, Diamond, J. ordered Galit’s motion to strike Yoel’s pleadings under r. 1(8) to proceed on July 26, 2022. In addition, Yoel was ordered to deliver the source documents provided to Mr. Ranot since he delivered the January 17, 2022 affidavit by no later than July 20, 2022.

August 2, 2022 Order

[21] On July 26, 2022, Faieta, J. heard Galit’s motion to strike Yoel’s pleadings, and an order that Yoel pay Galit the sum of $3,500 for each day that he remains in non-compliance with the orders, retroactive to January 17, 2022 for his failure to comply with the 2021 Faieta Orders. On August 2, 2022, Faieta, J. ordered that if Yoel fails to deliver his income report and business valuation report by Mr. Ranot by November 4, 2022, then Yoel’s Answer was to be struck out except for his claim for custody and access, Galit shall have leave to proceed to an uncontested hearing on all issues, other than parenting; and in terms of the hearing, other than parenting, Yoel is to have no right to seek disclosure from Galit, no right to take any step nor bring any motion in this proceeds or be permitted to attend or participate at the uncontested trial unless the trial judge orders otherwise. Yoel was also not permitted to bring any further proceedings or seek further relief from the court until he is in compliance with the 2021 Faieta Orders. If by November 4, 2022, Yoel remained in non-compliance with the 2021 Faieta Orders then Galit was entitled to bring whatever motion she deemed necessary. Yoel was required to sign the Authorizations and Directions prepared by Galit to grant her full access to the full financial and corporate records Yoel was required to disclose by August 16, 2022;

[22] On June 22, 2023, Galit’s motion for a sealing order to allow her to take remedial steps to address her CRA liability was heard by Faieta, J. Although Yoel consented to the relief sought, Faieta, J. dismissed the motion because it was not justified under the open court principle.

January 5, 2024 Order

[23] The long motion was heard on August 30, 2023; September 12, 2023 and October 4, 2023. This included Galit’s motion for payment of $10,505,000 as an advance EP to allow her to submit a voluntary disclosure application to CRA and Yoel’s cross motion to set aside the freezing orders made by Faieta, J. in the 2021 Faieta Orders or for an order to permit him to withdraw $25,000 a month to pay business expenses and employee costs. On January 5, 2024, Faieta, J. ordered Yoel to pay Galit $7,975,006 as an advance on the EP; the parties to exchange Affidavits Listing Documents within 6- days; and the parties to conduct one full day of questioning of each party. Faieta, J. subsequently ordered Yoel to pay Galit’s costs of the August 30, 2023 long motion in the sum of $175,000. Yoel’s motion was dismissed.

[24] In accordance with the January 5, 2024 order, Galit has received a total of $4,771,551.85 as an advance on the EP as set out below. This entire sum was remitted by Galit’s lawyer to the CRA. (a) She received $534,677.41 from Gluskin Sheff (Onex) on February 2, 2024; (b) She received $2,881,000 from Canaccord on February 16, 2024; and (c) She received $1,355,874.44 from Canaccord on March 4, 2024;

[25] On February 13, 2024, Diamond, J. permitted Galit to bring a motion seeking whatever remedy she chooses under r.1(8) on account of the outstanding disclosure.

[26] On June 18, 2024, Faieta, J. made an order clarifying that only funds of up to $7,975,007.60 were to be paid from the funds held at Canaccord to Galit, and no other payments, including payments for the children’s tuition were to be paid out of Canaccord, until the advance to Galit had been paid.

1st Alleged Breach: Yoel has Disparaged Galit in front of the children and discussed Financial Matters with the Children

[27] Paragraph 4 of the October 5, 2021 Faieta Order states that neither party can disparage the other or talk about financial matters to the children.

[28] According to Galit, Yoel told the children such things as their mother is going to jail, and they will lose their home. In an Exhibit to her affidavit sworn on March 13, 2024, Galit produced a text Yoel had sent the children indicating that their PayPal account would be cut off. The specific wording was “You can’t use your pay pal anymore…you can ask your mother.”

[29] Yoel, in his affidavit materials, denies having included the children in financial matters or having disparaged their mother. He denied saying “Your mother is going to jail.” Or “you will lose your home.” However, after Galit attached a copy of his text to the children about their PayPal accounts, Yoel admitted that he wrote that text to the children but explains that he did so because he was closing his credit cards in Canada.

[30] Further, Yoel vehemently denies that he threated criminal proceedings against Galit. He does acknowledge that a cease-and-desist letter was sent to Galit by Marie Henein because Galit had been opening his mail, a federal offence. Galit acknowledges opening one letter addressed to Yoel. Galit claims this was an error. Galit acknowledges that she has at least 24 envelopes addressed to Yoel that have been sent to the matrimonial home and she has detailed these envelopes to Yoel and his counsel.

[31] Based on the conflicted record before me, I do not find that Yoel has disparaged Galit in front of the children. While the text to the children does direct them to ask their mother about their PayPal purchases, it does not confirm that he discussed financial issues with them. While it is not appropriate, in my view, to place the children in the middle of a parental dispute, this text on its own, does not prove that Yoel breached paragraph 4 of the October 2021 Order by discussing financial matters with the children.

2nd Alleged Breach: Yoel failed to pay the Children’s School Tuition

[32] Paragraph 9 of the October 2021 Order provides that Yoel shall continue to pay the cost of tuition for the children. On February 16, 2024, both parties were sent an email from Bialik Hebrew Day School indicating that Yoel’s credit card had declined for the monthly tuition payment. On February 17, 2024, Yoel sent an email to Bialik, copying Galit, in which he stated, “I am no longer paying for this. Galit will be paying this. Thanks Yoel”. The “this” references tuition. Yoel submits that he was agreeable to pay tuition for the children but wanted to do so out of his corporate account at Canaccord, to which Galit would not agree. Ultimately, Galit paid the CHAT tuition and the Bialik tuition.

[33] I find that even though Yoel made some payment toward outstanding tuition, the email Yoel sent to Bialik Hebrew Day School advising that he is no longer paying for tuition, is a willful breach, and in direct contravention of the October 2021 Order.

3rd Alleged Breach: Yoel has failed to comply with his rolling disclosure obligation to Galit

[34] Galit argues that Yoel is in breach of paragraph 12(c) of the October 2021 Order because he failed to provide rolling disclosure to her every 30 days. In Yoel’s responding affidavit, sworn on April 15, 2024, he denies that he has failed to do so. During submissions, Yoel argues that he did not understand that he had an ongoing, rolling obligation to provide Galit with disclosure. Yoel interprets paragraph 12(c) of the October 2021 to have required him to deliver an affidavit to Galit within 30 days setting out the details provided for in (a) – (d) of paragraph 12. Even though Faieta, J. defined the ongoing 30-day rolling period as “the reporting period”, Yoel argues that the language in the October 2021 order is ambiguous and, therefore, any breach by him was not intentional.

[35] Essentially, Yoel’s position is that he is not in breach of paragraph 12(c) of the October 2021 Order because he complied with paragraph 12(a) by providing Galit with an affidavit in 30 days of the Order on November 29 2021. Yoel does not read the subparagraph (c) as obliging him to provide ongoing rolling disclosure to her every 30 days. If Yoel is wrong in his interpretation of this paragraph of the order, he further submits that the FLRs should not be used as a sledgehammer to deny him a right to participate in these proceedings. Further, he claims it was not a willful default of paragraph 12(c) of the October 2021 Order because he did produce the affidavit within 30 days and, therefore, he was partially compliant.

[36] I do not find Yoel’s explanation that he did not know about the rolling disclosure obligation to be plausible. Yoel’s counsel was present at the motion and consented to the language in the draft Order, having approved the Order as to its form and content. Further, the November 2021 Order further requires Yoel to attached all statements of account from July 1 2018 for all accounts held directly or indirectly by him. The November 2021 order was made because Yoel was not in compliance with the October 2021 Order. In addition, Yoel acknowledged his breach of paragraph 12(c) of the October 2021 Order, since in the Endorsement of Faieta, J., dated August 2, 2022, (10 months after the October 2021 Order), at para [47] he states:

[47] In respect of the Respondent's obligation to provide documentary disclosure in relation to account statements and other documents from Mandeville Private Client Inc. pursuant to paragraph l2(b ), ( c) and ( d) of the Order dated October 5, 2021 and pursuant to paragraph 1 of the Order dated December 14, 2021, the Respondent acknowledges that he is in breach of those provisions. (Emphasis added)

[37] I find that Yoel’s counsel’s submissions that Yoel was not aware that he was in breach of the rolling disclosure obligation is disingenuous. Further, at a case conference on January 30, 2023, the Endorsement of Diamond, J. clearly references the October 2021 Faieta Order and refers to it as Yoel’s “rolling disclosure obligation”, giving Yoel until February 15, 2023 to comply with the order. Yoel was present at that case conference. Even if, as Yoel argues, he was not clear that he had an ongoing rolling obligation to provide Galit with updated disclosure every 30 days, the very latest he ought to have known about his ongoing obligation to produce disclosure every 30 days was on January 30, 2023. Even if this were the case, Yoel did not take any steps between January 30, 2023 and the hearing of this motion, 17 months later, to comply with this rolling obligation.

[38] Accordingly, I find that Yoel is in breach of his ongoing, rolling financial disclosure obligation set out in the October 2021 Order, and that he breached the December 2021 Order when he was given a further opportunity to comply with the rolling disclosure obligation by January 17, 2022.

4th Alleged Breach: Yoel failed to disclose the Financial and Corporate records pertaining to his corporations as at the date of separation and subsequently.

[39] It is not disputed that since separation, Yoel has not provided any information about what business he is in currently, where he does business, or what income he is making from his business.

[40] Galit argues that Yoel breached paragraph 13 of the October 2021 Order and the subsequent orders which expanded the timeline within which Yoel was to provide his financial and corporate records. Yoel denies that he is in breach of this paragraph since he claims to have signed 21 authorizations and directions giving Galit access to this information directly from various institutions. I am not persuaded that Yoel is correct in his analysis for the following reasons: i) Yoel was ordered to disclose his financial and corporate records for any corporation in which he had an interest in the October 2021 Order. ii) On November 12 2021, Yoel’s financial disclosure obligations were expanded when he was ordered to attach all statements of accounts from July 1 2018 to the present for all accounts he held directly or indirectly at any financial institution located anywhere in the world. This would include accounts held in Yoel’s name or in a corporation owned by him. iii) Yoel was then given a further runway, until January 17, 2022, to produce his corporate and financial records, in the December 2021 Order. iv) In Faieta, J.’s Endorsement, dated February 2, 2022, he states at paragraph 48, he ordered Yoel to deliver authorizations to Galit so she can obtain the financial and corporate records related to his corporate interests because Yoel was in breach of paragraph 13 of the October 2021 Order. v) Yoel does not dispute that since June 2023, not one piece of disclosure has been produced by him directly. That was one year ago. vi) Upon complying with the February 2, 2022 Order and providing Galit with the 21 Authorizations and Directions, Galit was then put to the legal cost of obtaining the financial and corporate records Yoel had not produced. Faieta, J. made a finding of fact that Galit “discovered that [Yoel] has an additional 54 undisclosed accounts with financial institutions, including 21 personal accounts, for the period July 2018 to present. [Yoel] has not provided any substantive response to this evidence.” [8]

[41] Yoel’s denial of his breach of providing disclosure has been explained by him in paragraph 43 of his affidavit, sworn on April 15, 2024, in which he states as follows:

43. The Applicant is simply attempting to mislead the court into believing that I am in breach of my ongoing obligation to provide financial disclosure, by stating that I did not transfer information to her “directly” versus her receiving it by way of my written authorizations and directions. The Applicant’s discreet differentiation as to how she received my financial disclosures has now been the cause of unnecessary expense and process.

[42] Yoel argues that because he provided Galit with the authorizations and directions, he is not in breach of his disclosure obligations. This is simply not the case. Yoel was ordered to execute the authorizations and directions because Faieta, J. found that his disclosure provided up to that date could not be trusted.

[43] It cannot be that a payor can deliver a set of authorizations and directions enabling a recipient to obtain the payor’s required disclosure and that the payor can take the position that his providing signed authorizations is tantamount to him meeting his obligations to provide disclosure.

[44] Even if Yoel believes he delegated his disclosure obligations to Galit by signing 21 authorizations and directions, I find that Yoel still had an ongoing obligation to what has come up from these authorizations and directions.

[45] Once Galit was put to the expense of obtaining the records from Yoel’s financial institutions directly and discovered any undisclosed accounts, that is proof of a breach of Yoel’s disclosure obligations both under the existing 2021 Orders and the FLRs. This is further evidenced by the fact that other than providing Galit with the 21 authorizations, Yoel has not provided any disclosure to Galit directly.

[46] Based on the above, I find that Yoel breached his obligations under the 2021 Faieta Orders to provide his financial and corporate documents pertaining to any corporation in which he had an interest from the date of separation subsequently.

5th Alleged Breach: Yoel failed to preserve his assets

[47] In paragraph 15 of the October 2021 order, Yoel was ordered to preserve and not dissipate his assets.

[48] When Yoel brought a motion to set aside or vary the preservation order, Faieta, J. found that Yoel had not been transparent with this disclosure of his financial affairs and dismissed Yoel’s motion. [9]

[49] Galit had discovered on account of the authorizations, that Yoel holds 7 accounts at the Bank of Montreal including a credit card and several related corporations hold a total of 5 accounts at the Bank of Montreal. None of these accounts were disclosed by Yoel. One of the accounts was a chequing account, account # ending in 385, which had a balance of about $695,000 as of August 1, 2023. This particular account was not frozen by the preservation order made in October 2021. Faieta, J. found that Yoel’s explanation for the non-disclosure of this account was that it was “inadvertent” and “that he was unaware that the funds were in this account.” Faieta also found, that Yoel stated that the funds from this account were used by him to pay the balances on this American Express credit card. [10]

[50] As described above, the evidence arising from the fruits of the authorizations and directions Yoel signed demonstrate that Yoel depleted an account held at BMO Nesbitt Burns, ending *5552-12, with over $1,150,000 in it after the preservation order and diverted the funds into new accounts at BMO, which he subsequently used and drew down, without having disclosed the Nesbitt Burns account, or the newly opened BMO accounts.

[51] When Galit produced the statements she was able to recover, Yoel denied that he breached the preservation order. He called Galit’s claims of depletion to be “outlandish” and claims the funds were depleted in the regular/ordinary course of business as allowed for in the “carve out provisions.” [11]

[52] The evidence of the transfers shows that as of February 28, 2023, Yoel’s BMO Nesbitt account had a closing value of $1,284,000. On March 15, 2023, there was a transfer of $780,000 made to an undisclosed account, account number ending in 9385. The address for this account is not the matrimonial home or Yoel’s address in the US. Rather, the address for this undisclosed account is a UPS post office box in the name of Umar Aziz.

[53] One of Yoel’s responses was that he was not aware of this account. In another response, Yoel claims that the carve out provisions in the October 2021 Order allowed him to withdraw these funds.

[54] Attached as Exhibit “E” to Yoel’s affidavit, sworn on April 15, 2024 is a chart he prepared to detail the transactions from the BMO account. In this chart, Yoel explains the amounts withdrawn by him from the undisclosed account and the purpose for each transaction. It is clear, therefore, that Yoel had this information in his possession and control but failed to disclose the information to Galit, until she brought forward her finding of the undisclosed accounts.

[55] Specifically, Yoel’s chart explains that the funds withdrawn from the undisclosed accounts were “for business purposes”, as follows: a) On March 31, 2023 from the BMO USD account #4533, he withdrew $386,000, the purpose of which was to partially pay off a promissory note he had signed in connection with a loan he received of $800,000 USD from Ari Gorelik. It is noteworthy that this debt to Ari Gorelik does not appear on Yoel’s sworn financial statement. The purpose of the line of credit is stated to be for “business purposes” but no proper explanation was provided. b) On September 21, 2023, from the BMO CAD account #9385, he withdrew $8,000, the purpose of which was to pay a business line of credit. It is noteworthy that no details have been provided as to where the business line of credit is held and/or the purpose of the line of credit. c) On September 25, 2023, from the BMO CAD account #9385, he withdrew $23,018.06, the purpose of which was to pay a CAD credit card used for business purposes. It is noteworthy that no details having been provided as to the business credit card or credit card statements. d) On January 24, 2024, from the BMO CAD account #9385, he withdrew $300,000, the purpose of which was to complete the payment for the promissory note to Ari Gorelik. No details of what the funds loaned to Yoel from Mr. Gorelik were used for were provided. e) On January 29, 2024, from the BMO USD account #4533, he withdrew the sum of $120,000 to pay off another promissory noted, dated November 11, 2022. Again, no details of what the funds loaned to Yoel were used for, other than saying it was for a “business expense.” f) On February 22, 2024, from the BMO CAD account #9395, he withdrew the sum of $31,537.82, the purpose of which was to pay a Canadian credit card used for business expenses. No details of the credit card or statements were provided to prove it was for business expenses. g) On March 6, 2024, from the BMO CAD account #9395, he withdrew the sum of $12,645.72, the purpose of which was to pay the home insurance. This is a legitimate payment under the “carve out provisions.” h) On April 3, 2024, from the BMO CAD account #9395, he withdrew the sum of $13,500, the purpose of which was to pay the ZZ Club in Miami where he claims he entertains existing and prospective clients. Again, no details were provided about the club, the nature of his business or clients.

[56] The promissory notes were signed by Yoel after the preservation order, yet no details were provided to Galit.

[57] On April 1, 2024, Galit put Yoel on notice of all items she claims are outstanding. Galit’s counsel prepared a chart detailing Yoel’s outstanding disclosure. This chart is attached to Galit’s affidavit, sworn on March 13, 2024, at Exhibit “P”. Yoel served his responding affidavit on April 15, 2024. No further attempts were made by him to produce any further disclosure.

[58] I cannot for certain determine on the written record before me, whether or not Yoel has breached the preservation order without knowing if the withdrawals were, in fact, made for legitimate business purposes, but he did breach a part of the preservation order requiring him to account for all withdrawals made for a business purpose and he has not provided the necessary disclosure or back-up documentation to prove that the funds were withdrawn for legitimate business purposes. One would have thought that if Yoel was going to claim to have withdrawn $1.2 million from undisclosed accounts for business purposes that he would have also provided all the supporting documentation to prove the monies were spent on business purposes. His chart does not provide that disclosure.

[59] Yoel argues that he did not breach the preservation order because there is a carve out provision allowing him to use any of the frozen funds in the regular course of business. However, Yoel does not report the true reason or proof that the funds were withdrawn for corporate purposes. Further, Yoel was required under the October 2021 Order to provide a strict accounting of funds used when requested. He has not done so.

[60] Further, the November 2021 Order expanded the preservation order and indicated that for any payments exceed $300,000, Yoel was to seek further consent of Galit or seek a further court order. It is clear from Yoel’s chart that there is one withdrawal of $300,000 on January 24, 2024 and a withdrawal of $386,000 on March 31, 2023, for which Yoel did not seek consent from Galit, even if the withdrawals were part of the carve out provisions.

[61] Based on all of the above, I find that there have been a number of triggering events, because of Yoel’s non-compliance with the disclosure obligations set out in the 2021 Faieta Orders and his obligations to provide financial disclosure under the FLRs. The triggering events can be summarized as follows: i) Yoel breached his primary obligation to disclose and value his assets and debts on the date of separation. This obligation is not only set out in Rule 13 of the FLRs, it was expanded upon in the 2021 Faieta Orders and subsequent orders made by both Faieta, J. and Diamond, J. Yoel has relied on his partial disclosure and raised technical arguments about fulfilling his disclosure obligations by signing authorizations and/or the ambiguity of language in the October 5, 2021 Faieta Order to deflect from the fact that the one thing he has not done is simply list truthfully and with back-up documentation all of his assets and liabilities as at the date of separation (including providing expert valuations where necessary). ii) Yoel’s email to Bialik Hebrew Day School, in which he declared that he is no longer responsible for the children’s tuition is a direct breach of the October 5, 2021 Order. iii) Yoel moved funds out of undisclosed accounts into new accounts and depleted these funds, after the preservation order was made and has not properly accounted for these funds, relying on the carve out provision that the funds were used for “business purposes”. The chart prepared by Yoel which details the purpose of just over $1 million being depleted was for “business purposes” rings hollow without any back-up documentation to prove that this is the case.

Step 2: Is it appropriate to exercise my discretion in favour of Yoel by sanctioning him under subrule 1(8) in some other manner, other than striking Yoel’s pleadings?

[62] Now that I have found that Yoel has breached several aspects of the 2021 Faieta Orders and the FLRs, I have to consider: i) the relevance of the non-disclosure, including its significance in hindering the resolution of issues in dispute; ii) the context and complexity of the issues in dispute, understanding that an uncomplicated case should have little tolerance for non-disclosure, whereas a case involving extensive valuation of assets may permit some reasonable delay in responsiveness; iii) the extensiveness of existing disclosure; iv) the seriousness of efforts made to disclose, and v) the explanations offered by a defaulting party for the inadequate or non-disclosure; and any other relevant factors.

[63] I find that the disclosure which remains outstanding goes to the heart of a number of the issues in this case. Without this ongoing disclosure, it is difficult for Galit’s expert to establish Yoel’s true income for support purposes, the value his property and the value of the equalization payment. There is no dispute between the parties that Galit is entitled to an EP. In this manner, I find that Yoel’s breaches and his outstanding disclosure is fundamental and elemental to establishing the central and material issues in this case.

[64] The second consideration I must make is to review the context of the breaches and take a holistic review of events. In order words, I am to consider the factual matrix against which the breaches were occurring by Yoel. I have done so as follows: i) In May 2021, at the first case conference, Pinto, J. awarded costs against Yoel for failing to produce reasonable financial disclosure. At that conference, Galit was granted leave to bring a motion for financial relief, disclosure and the preservation of Yoel’s assets. This order was made because Yoel’s sworn financial statement was replete with “TBDs” such that the conference was rendered unproductive. That is the first court appearance in this case. ii) At the first motion brought by Galit, Faieta, J. ordered Yoel to pay Galit interim uncharacterized support in the sum of $1.7 million. In his order of October 5, 2021, Faieta, J. made various parenting orders, required Yoel to deliver an expert income and valuation report, and made a freezing order against Yoel’s assets. Further, Faieta ordered Yoel to produce extensive disclosure from June 2018 onward, and to continue to produce that disclosure every 30 days on a rolling basis. iii) Yoel did not comply with the October 5th, 2021 Order. As a result, Faieta, J. made further orders on November 12, 2021, December 13th, 2021 and December 16th, 2021. iv) Despite his non-compliance, Yoel brought motions to compel disclosure from Galit, to obtain money from his frozen funds to pay his bills, and to obtain further funds to resolve his own CRA debt. The Court did not find that Yoel was being forthright with his disclosure and refused to lift the preservation order. v) To address Yoel’s motions and their respective income tax liabilities, the parties attended at TBST Court. On consent, Diamond, J. vacated Yoel’s motion date and released the sum of $505,000 to each party to allow them to deal with their taxes. Galit released her funds to her lawyers and they were paid to the CRA. vi) At another case management motion before Diamond, J., Galit was granted leave to bring another motion to compel Yoel to deliver his income and valuation report. vii) In August 2022, Galit brought another because she was having difficulty getting financial disclosure which Yoel was ordered to provide. Faieta, J.’s August 2nd, 2022 Order provided that if by November 4, 2022, Yoel remained in non-compliance with the October 5th, 2022, November 12, 2021 and December 14, 2021 orders, Galit could bring any motion she deemed necessary to obtain further relief. Faieta, J. also ordered Yoel to sign Authorizations and Directions so she could obtain financial disclosure directly from the financial institutions because Yoel was in breach of his disclosure obligations. viii) On November 4, 2022, Yoel delivered his expert reports. His expert, Steve Ranot, opined that Yoel’s income for support purposes was in the negative millions. Galit’s expert, Timothy Martin, from Verity Valuation Group, made requests for further information from Yoel in April 2023. Yoel has not complied with this RFI. ix) At the last motion to strike Yoel’s pleadings, Faieta, J. detailed the many breaches Yoel had made of his prior 3 orders but he exercised his discretion in favour of not striking Yoel’s pleadings. He gave Yoel a further runway to fully comply with the disclosure orders. x) Now, it is 2 years later and Yoel has still not complied with the disclosure orders. He takes the position that he has not breached the Orders because he signed 21 Authorizations and Directions. However, when Galit discovered 54 undisclosed accounts arising from the authorizations, Yoel claims not to be responsible. Several authorities make it clear that signing authorizations and directions does not amount to complying with disclosure orders. For example, in Service v Service, 2011 ONSC 4900, paras 7-8, 13, Justice Lemon rejected the husband’s argument that “he presumed that simply providing the releases and authorizations would suffice” for meeting his disclosure obligations. Justice Lemon ordered that the husband shall make efforts to provide information and documents from third parties to the wife, and that the husband was not to “foist” this responsibility onto his wife. xi) Similarly, In McCormack v Fishbayn, 2020 ONSC 351, at paras 23-28. the fact that the husband had provided Authorizations and Directions to the major banks again did not absolve him of his duty to provide disclosure. In McCormack, the wife’s counsel had used the husband’s Authorization and Direction to contact BMO and request statements, just as in this case. Galit ought not to be responsible to cure Yoel’s breaches of the Orders of this Court herself. This is especially so when Yoel’s own evidence makes clear he is already in possession of up-to-date BMO statements. Yoel is refusing to provide that which he has a positive obligation to produce—whether under Justice Faieta’s Orders or under the FLRs. In McCormack, in light of the husband’s non-responsiveness/failure to pay the expense of obtaining statements from BMO, the Court found that “[a]s a result, he has not produced the BMO statements to the wife as ordered”. xii) I find that providing signed authorizations and directions does not obviate Yoel from complying with his ongoing disclosure obligations. It cannot be the case that the owner of the bank accounts and credit card statements has the same obligations of the non-owner spouse to search and find these accounts simply because the payor signed authorizations and directions. xiii) In terms of Yoel’s non-payment of tuition, the emails he sent to Bialik in which he states he is not responsible for the tuition payments, is in direct conflict with the October, 2021 Faieta, Order. xiv) In terms of Yoel’s breaches of his ongoing disclosure obligations, his failure to produce the financial and corporate disclosure for his corporate holdings, it is clear from a review of the litigation history, that Yoel has been given multiple attempts to rectify these breaches. The first disclosure order was made almost 3 years ago. Further orders were subsequently made, lengthening the runway within which Yoel was to comply with the orders. He did not do so. His inability to comply with the basic disclosure obligations, left this Court to suggest that he sign Authorizations and Directions so Galit could access the institutions and disclosure he was required to produce. Yoel now uses these Authorizations and Directions to justify his non-disclosure. Yoel is further claiming now, for the first time, that the language of the October 2021 Order is ambiguous. It is abundantly clear from a reading of earlier findings of fact made by this court in this case, that Yoel has consistently failed to comply with the financial disclosure Orders, and that he lacks respect for the FLRs.

[65] The FLRs clearly set out Yoel’s financial disclosure obligations. These rules apply immediately and they are ongoing. In this case, Galit has brought many motions to address Yoel’s breach of the disclosure orders. Partial compliance with certain orders is not sufficient to justify other breaches.

[66] As set out in Leitch v. Novack, 2020 ONCA 257 at para 44:

“[44] As the Supreme Court suggested in Leskun v. Leskun, [2006] 1 S.C.R. 920, [2006] S.C.J. No. 25, 2006 SCC 25, at para. 34, nondisclosure is the cancer of family law. This is an apt metaphor. Nondisclosure metastasizes and impacts all participants in the family law process. Lawyers for recipients cannot adequately advise their clients, while lawyers for payors become unwitting participants in a fraud on the court. Judges cannot correctly guide the parties to a fair resolution at family law conferences and cannot make a proper decision at trial. Payees are forced to accept an arbitrary amount of support unilaterally determined by the payor. Children must make do with less. All this to avoid legal obligations, which have been calculated to be a fair quantification of the payor's required financial contribution. In sum, nondisclosure is antithetical to the policy animating the family law regime and to the processes that have been carefully designed to achieve those policy goals.

[67] Yoel’s partial disclosure and signing of authorizations and directions does not equal full disclosure of his assets. Without complete disclosure from Yoel, including disclosure of account statements, corporate financial statements, back-up documentation for business transactions, and full compliance of the court orders made in this matter, Galit’s lawyer cannot adequately advise her of her entitlement and the judges of this Court cannot make a proper decision at trial.

[68] Yoel has failed to produce disclosure on a voluntary basis since June of 2023, leaving Galit to the costly exercise of chasing Yoel’s financial institutions to obtain the information she requires. As described above, the authorizations have revealed a host of undisclosed accounts and financial activity – including Yoel’s draining of an investment account he held at BMO that had about $1,200,000 in it. Yoel has now provided conflicting accounts of his own knowledge about this undisclosed activity— information that should have been produced at the first instance, but that instead, Galit had to go to great personal expense to obtain. Yoel has stated he is working “tirelessly” to provide explanations about the other undisclosed accounts and activity.

[69] As stated by Justice Quinn in Gordon v Starr, “[o]ne of the reasons that many family proceedings degenerate into an expensive merry-go-round ride is the all-too-common casual approach to compliance with court orders”. Yoel’s casual approach to his “compliance” is evident in not only the absence of any effort to update Galit and her counsel about his finances, but also in his attempts to use the Court process to drive up Galit’s costs by serving disingenuous requests for information and motions to obtain self-interested relief in the face of his breaches. For example, in the summer of 2023, Yoel brought a motion seeking the release of funds because he claimed he had none. Justice Faieta concluded that Yoel had not been transparent about his finances, and that he had not made out a case for his supposed need of funds. More recently, Yoel brought proceedings in the Divisional Court seeking leave to appeal the order of Justice Faieta, which awarded Galit $7.9M to deal with the “tax liability mess” that His Honour found Yoel had created on her behalf. He also changed counsel on the eve of the hearing of this motion, causing further delays and costs to be incurred by Galit.

What Remedy is Appropriate under r.1(8)?

[70] Yoel argues that striking his pleadings would not be fair because he tried to comply with the 2021 Faieta Orders in good faith. It is correct that Yoel has complied with aspects of the 2021 Faieta Orders. It is also correct that Yoel has not willfully decided not to participate in this proceeding. Yoel argues given that he has complied with aspects of the orders, striking pleadings is a last resort and should be exercised with great discretion where there are no other available remedies.

[71] As set out in Levely v. Levely, 2013 ONSC 1036 at para 15, where a party has “demonstrated a blatant and persistent disregard for the court process and court orders… and [h]is conduct has caused significant inconvenience and expense” for the other party, strong sanctions are “necessary in order to ensure that justice is done”.

[72] Striking pleadings is an appropriate remedy in cases involving a persistent failure to provide disclosure that goes to the “heart of the issues to be tried”. In Dagher v Hajj, 2021 ONSC 2853, at paras. 23 and 28, Justice Audet struck the husband’s pleadings when he failed to produce court-ordered disclosure that went to the root of the support claims at issue, namely, the establishment of the husband’s true income for support purposes. The additional documents that had been ordered to be produced were also necessary to determine the parties’ entitlement to an equalization payment, and its quantification. As in Dagher, there is no doubt that the question of Yoel’s true income for support purposes and net family property go to the very heart of issues to be determined in this matter. The case cannot move forward with incomplete information. Galit engaged Timothy Martin of Verity Valuation Group to review the expert reports delivered by Yoel (which asserted, among other conclusions, that Yoel’s income for 2020 and 2019 was - $10,240,000 and - $13,790,000 respectively). Mr. Martin made requests for further information from Yoel over a year ago. In addition to failing to produce the disclosure mandated by Justice Faieta, Yoel never provided the information requested by Mr. Martin.

[73] Yoel has had plenty of opportunity to cure his disclosure-related breaches. He has not done so. In the case of Xidis v Xidis, 2012 ONSC 6931, at paras. 77 and 80, the husband’s failure to produce most of the financial disclosure set out in various agreements and consent court orders was the subject of criticism by Justice Richetti, who remarked “[o]ne would have expected that, within that two-month period, the Husband would have made complete financial disclosure required of him. Had he done so, the Husband would have been in a much better position on this motion. The Husband chose not to do so.”

[74] Yoel has had over a year to bring himself into compliance with Justice Faieta’s 2021 Orders. Like the husband in Xidis, he has chosen not to do so. Like the wife in Xidis, Galit “is in no better a position that she was when she started [her] application” coming up on four years ago. Also like the husband in Xidis, Yoel’s “explanations for not producing the financial documentation are not credible”. From the outset of these proceedings, Yoel has relied on the “complexity” of his finances to justify missing, late, or vague information about his income and net worth. In any event, in Mullin v. Sherlock, 2018 ONCA 1063 at para 51, “financial complexity” does not justify the wilful breach of court orders. Full compliance “is the expectation, not the exception.”

[75] Where it is clear that a party does not take the court proceedings or their obligations to abide by court orders seriously, the striking of pleadings is the appropriate remedy. In Bourassa v Magee, 2014 ONCJ 393, at para. 42. O’Connell J. concluded in the face of the husband’s ongoing non-compliance that giving him “even more opportunities to comply with the disclosure order will just prolong the process with no reasonable expectation that he will comply”.

[76] As stated by Myers J. in Manchanda v Thethi, 2016 ONSC 3776, at para 75 “[h]ow many orders does a party get to breach on top of ignoring the primary objective that requires early, voluntary and complete disclosure without an order even being made?” Yoel has been given numerous chances to comply with Justice Faieta’s orders but he continues to be in breach of same. Yoel’s inaction in terms of his disclosure obligations in this litigation demonstrates that he is not taking these proceedings seriously.

[77] In Manchanda, Justice Myers questioned the degree to which striking of pleadings should still be reserved for drastic and extreme cases and I accept and value his views:

75 Moreover, I respectfully question the degree to which striking of pleadings should still be reserved for drastic and extreme cases. How many orders does a party get to breach on top of ignoring the primary objective that requires early, voluntary, and complete disclosure without an order even being made? It is not the remedy that should be exceptional. Rather, it is the continued existence of cases with parties who ignore their disclosure obligations that ought to be exceptional. The remedy will become exceptional when the Rules are followed and enforced as written and as interpreted. That is, once cases with non-disclosure issues are exceptional, then the need to consider striking pleadings for non-disclosure too will be exceptional. Failing to provide consequences however is tacit, if not explicit, permission to continue the course that countless courts have already said is inappropriate. Deferred disclosure, delayed disclosure, and non-disclosure cannot be accepted as normal, tactical give and take in 2016.

[After referring to paragraph 12 of Levely, cited above, His Honour continued:]

77 Implementing a culture shift to enhance access to justice by promoting efficiency, affordability, and proportionality requires the court to re-draw the line between limiting drastic measures and applying the law robustly. In my respectful view, a little less judicial diffidence, a little less reluctance to hold accountable those who would deny justice to their former spouses, and a little more protection of abused parties from abusers, might be a better fulfillment of our critical responsibility as so aptly phrased by Justice Chappell. After 17 years, it is time for the court’s words were taken to mean what they say.

[78] The Court of Appeal affirmed Justice Myers’ ruling, adding at paragraph 13:

After continual admonitions by the courts and the legislature that parties to a matrimonial proceeding must produce financial documentation, willful non-compliance must be considered egregious and exceptional. This court has stated that the most basic obligation in family law proceedings is the duty to disclose financial information. The requirement is immediate and ongoing: Roberts v. Roberts, 2015 ONCA 450, 65 R.F.L. (7th) 6, at para. 11.) In 2015, Family Law Rule 13 was amended to emphasize a party's financial disclosure obligations. A party's non-compliance must be considered in the context of this strict financial disclosure obligation. Rule 1(8) provides the court with the authority to strike claims. Those who choose not to disclose financial information or to ignore court orders will be at risk of losing their standing in the proceedings as their claims or answers to claims may be struck. Manchanda v. Thethi, 2016 ONCA 909, 84 R.F.L. (7th) 374 at para. 13.

[79] The Court of Appeal’s earlier statements about the exceptional status of striking pleadings for non-compliance with court orders or disclosure obligations must therefore be read with this more recent interpretation in mind.

[80] On April 26, 2024, an amendment was made to r.1(8) of the FLRs to add (a.1) “an order to pay an amount to a party or into court as a penalty or fine.” [12]

[81] I will grant Yoel one final 45-day period to comply with the outstanding disclosure and impose a penalty/fine of $3,000 a day for each day between the date of the release of this Endorsement onward. If after 45 days, Yoel has not provided the outstanding disclosure, then a procedure has been established which will either end the dispute about disclosure or permit Galit to move ex parte to strike Yoel’s pleadings, which I find is a proportional remedy in light of both his breaches and his conduct. I do not see how giving Yoel any further chances beyond this 45-day period, to rectify his breaches would be helpful in this situation. The opaque nature of Yoel’s finances are important in this case. There is no way to test whether Yoel’s assets have fallen because of the market or because he has depleted them. A review of the chart provided in Yoel’s affidavit, sworn on June 17, 2024 shows that he discloses transactions in what he refers to as a “business purposes”, such things as promissory notes, which have not been disclosed before and for which he has failed to produce sufficient documentation to prove the funds were used for business purposes. If Galit had not found evidence of these transactions, there is no way to know whether Yoel would have disclosed this information. This was a direct breach of the preservation order, in that even if Yoel was allowed to move these funds because it was done in the “ordinary course of business,” he failed to comply with his obligation to provide Galit with an accounting of him doing so.

Order

[82] This court makes the following order: a) Within 45 days of the release of this Endorsement, Yoel shall rectify his breaches of the 2021 Faieta Orders and provide the outstanding disclosure to Galit. This includes the rolling disclosure obligation for any and all accounts over which Yoel has an indirect or direct interest, answering all of the items that have been identified by Galit’s counsel as outstanding set out in Exhibit “P” of her March 13, 2024 affidavit, answering the RFI delivered to him by Tim Martin, and providing complete details of all transactions arising from the 54 undisclosed accounts with supporting documentation. For every day that Yoel does not comply with this disclosure obligation between the day of the release of this Endorsement and onward, he shall be fined $3,000 a day. b) At the end of the 45-day period, Galit shall prepare a summary chart detailing what she claims remains outstanding, if anything. Within 7 days of receiving the summary chart from Galit, Yoel shall provide a responding chart. The parties shall arrange a conference before the case management judge, Diamond, J. to address whether there remains outstanding disclosure. c) If a consent cannot be reached at the case management conference before Diamond, J. and a further dispute between the parties remains, Diamond, J. shall determine whether a further hearing is needed to determine whether there is outstanding disclosure remaining or whether Galit shall be permitted to move ex parte to have Yoel’s Answer struck (except for his parenting claims). d) Until (b) and/or (c) takes place, Yoel shall continue to be fined $3,000 a day. e) Yoel shall have no right to seek disclosure from Galit, no right to take any step nor bring any motion in this proceeding or be permitted to attend or participate at the uncontested trial unless the trial judge orders otherwise. f) Yoel shall not be permitted to bring any further proceedings or seek further relief from the court until he is in compliance with the 2021 Faieta Orders as set out in (a) above. g) If this matter is proceeding to an uncontested trial, a trial management conference shall be scheduled to determine the length of uncontested trial and any procedural/evidentiary issues that need to be addressed. h) Galit is entitled to costs of this motion, given her success. If the parties cannot agree on costs, Galit shall submit cost submissions of no more than 3 pages in writing, not including a Bill of Costs or Offers to Settle within 15 days. Yoel shall submit responding costs submissions of no more than 3 pages in writing, not including a Bill of Costs or Offers to Settle within 7 days of being served with Galit’s costs submissions. Galit shall serve and file reply costs submissions, if necessary, of more than 1 page in writing within 5 days of being served with Yoel’s responding costs submissions.

Released: July 15, 2024

M. Kraft, J.

Notes

[1] Altman v. Altman, 2023 ONSC 108, para. 3. [2] Ibid, at para.4, also Altman v. Altman, 2022 ONSC 4479, at para. 4. [3] Ibid, at para. 32. [4] Ibid, Note 3, at para. 3, Supra, Note 2, at para. 8. [5] Altman v. Altman, 2023 ONSC 108, at para. 28. [6] This is referred to throughout this Endorsement as Yoel’s “rolling disclosure obligation.” [7] This is referred to throughout this Endorsement as the “carve out” provisions to the preservation order. [8] Ibid, at para. 33(1). [9] Ibid, at para. 41. [10] Ibid, at para. 40. [11] Yoel’s affidavit, sworn on April 15, 2024, at para. 45. [12] Reg 2024.0115.e05.