Court File and Parties
Court File No.: FS-21-26821 Date: 2024-08-16 Superior Court of Justice - Ontario
Re: Isabel Jarosz, Applicant And: Christopher Denda, Respondent
Before: Justice M. Sharma
Counsel: J. Rosenberg, for the Applicant E. Compeau, for the Respondent
Heard: July 30, 2024
Endorsement
1This is the Applicant’s motion for disclosure. The relief sought, as set out in her Notice of Motion, is:
a. An Order requiring the Respondent, Christopher Denda (“Respondent”) to produce, within 21 days, to the Applicant, Isabel Jarosz (“Applicant”), all the outstanding information/disclosure as set out in the Schedule of Preliminary Information Required by ap Valuations Limited as at January 16, 2024 (updated as at March 15, 2024, and further updated as at June 3, 2024), to the extent not already provided.
b. An Order requiring the Respondent to pay to the Applicant her costs of this Motion for an Order for disclosure on a full indemnity basis or as otherwise determined by the Court.
2The Respondent brings his own motion, albeit on short notice. He seeks Orders to:
a. Dismiss the Applicant’s motion, or that it be adjourned to be addressed at the settlement conference scheduled for July 31 (the day after the motion was argued),
b. Strike para. 22 of the Applicant’s affidavit dated July 22, 2024 because it contains settlement privileged discussions,
c. Restrict the Applicant’s ability to disclose financial disclosure received from the Respondent to others (except her lawyer and financial expert); and
d. Deny the Applicant the right to oppose any motion brought by the Respondent, and certain business to seal or redact documents relating to those businesses.
Practice Concerns
3This motion is a good example of what family lawyers ought not do. It represents a lack of appreciation of what a judge can reasonably be expected to do in a 1-hour motion. It exemplifies poor written advocacy. It underscores the importance of cooperative and positive professional relationships between opposing counsel.
4Using CaseLines master page numbers, the Applicant’s material for this 1-hour motion consisted of 268 pages of material, not including material related to costs. The Respondent’s material for this 1-hour motion consisted of 555 pages of material, not including material related to costs.
5In the Applicant’s affidavits in support of her motion, the following is found or is missing:
a. Extensive re-copying of communication between counsel that hurls blame and attacks the opposing party or their logic, and includes settlement discussions;
b. Discussion of issues entirely unrelated to the straightforward issue of disclosure;
c. Lack of basic facts to explain why the requested disclosure is relevant. In disposing of this motion, the Court struggled to understand the relationship between the Respondent and third-party corporations where disclosure was sought.
d. No chart was prepared that summarizes the outstanding disclosure in a succinct, digestible manner, explaining what information was requested and when, why it is relevant, what has been produced, and whether the disclosure is proportionate.
6Instead, the Applicant attaches to her affidavit a document prepared by her financial expert that explains all of the requested information sought since January 2024. There are 90 paragraphs of requested disclosure with numerous subparagraphs. Most paragraphs and subparagraphs request multiple documents or document types. This document totals 56-pages. There is extensive commentary describing what disclosure is sought, why it is relevant, what has been produced and what is outstanding. To decipher what is outstanding requires a review of the entire document. I must then cross-reference this with what the Respondent says has been produced.
7Family litigants and lawyers must appreciate that the Court does not have the resources to fish through voluminous material to try and understand the relief sought and why it should be granted. Parties cannot expect the Court to do the moving party’s work. Succinct charts, where both parties have inputted their respective positions, are essential for disclosure motions to be decided efficiently. This Court has reminded lawyers and litigants that it expects a chart on a disclosure motion: see, e.g., Monga v. Monga, 2024 ONSC 761 at para. 57.
8In addition, counsel ought to have had frank and professional discussions prior to this motion so that the material and the issues could be more focussed.
9The motion confirmation form requires parties to indicate whether they have conferred in advance of the motion. For this motion, both lawyers indicated on this form that they had conferred with opposing counsel regarding the issues, motion material and time estimates. This was not accurate. Mr. Rosenberg, when asked by the Court, confirmed that he did not speak with Ms. Compeau about the specific disclosure he sought on this motion. Ms. Compeau, when asked by the Court, advised that she attempted to call Mr. Rosenberg twice to discuss this motion. She further indicated that she was away for periods in July 2024, but nonetheless exercised efforts to address this motion, respond to outstanding disclosure, and respond to Mr. Rosenberg.
10From what I was told and from the motion materials, it appears Ms. Compeau attempted to have productive communications and be responsive to the disclosure requests. Mr. Rosenberg chose, instead, to send lengthy emails and letters that were accusatory, hyperbolic, and not resolution oriented.
11After reading the Applicant’s affidavit material, I can see why the Respondent was perplexed in understanding what disclosure remained outstanding. I am satisfied that the Respondent has provided significant financial disclosure in this case and that he has provided explanations for certain requested disclosure that is either not available or not available yet. For some items, he likely did not appreciate what remained outstanding until Mr. Rosenberg made arguments at the hearing. For other items, he requested the Applicant, her counsel and her expert sign a non-disclosure agreement (“NDA”) prior to disclosure, which the Applicant refused to do.
12At the start of my motion list, I expressed my frustration with the motion material. I stood the matter down to hear another motion. I instructed counsel to confer on the specific items that were outstanding and not disclosed. When the motion was heard, Mr. Rosenberg focussed his disclosure requests to items listed in a letter from the Applicant’s financial expert, Mr. Pont, dated July 25, 2024, attached to the Applicant’s Reply Affidavit. This letter was dated three days after this motion was filed, and in fairness to the Applicant, it appears to account for disclosure that was not received by the Applicant until around July 19, 2024.
13I will deal with this motion based on the items listed in Mr. Pont’s letter of July 25, 2024 as it is the only succinct summary of items that appear to be outstanding. I will also deal with the relief in the Respondent’s cross-motion.
Background
14Leave for this motion was granted by Kraft J. at a case conference held on April 25, 2024.
15In this section of my decision, I would have liked to have framed this motion for disclosure with a summary of the Respondent’s employment, sources of income, and business interests for which disclosure is sought, but none of this information was contained in the parties’ affidavit. At most, I know the Respondent works in commercial real estate as Executive Vice President for Jones Lang LaSalle Real Estate Services (“JLL”). Had it not been for the Respondent’s admission with respect to the relevance of information from certain number companies (i.e., there was a willingness to disclose certain information if an NDA were signed), the Applicant’s motion would have largely been dismissed.
16The Respondent completed his own expert valuation reports. He provided those reports along with scope of review documents to the Applicant on March 28, 2022.
17The Applicant retained Mr. Pont in or around January 2024, nearly two years after the Respondent completed his reports. Mr. Pont prepared an 18-page Request for Information (“RFI”) that was delivered to the Respondent on January 29, 2024. On February 26, 2024, the Respondent states he responded to the RFI.
18There were follow-up requests for additional information made by the Applicant. First, on March 15, 2024, which the Respondent answered on April 15, 2024, and then again on June 3, 2024, which the Respondent delivered a response on July 12, 2024.
19In the July 12, 2024 response, the Respondent’s counsel advised that in relation to a request for reported deferred revenue and a forgivable loan, there is a confidentiality clause contained in the Respondent’s employment contract. Extracts of those clauses were provided to the Applicant which suggest that if the Respondent were to disclose confidential information with respect to his employer’s business, financial penalties could be imposed on the Respondent. As such, Respondent’s counsel asked that the Applicant, her counsel and her expert sign an NDA, and upon it being signed, a password protected link to the supporting documents would be provided. The July 12, 2024 response also included substantive responses to 85 items of requested disclosure, many of which the Respondent states were previously disclosed or answered.
20On July 17, 2024, the Applicant responded. She refused to sign the NDA and disputed its need. Her lawyer explained that neither his firm for he had ever signed an NDA in any case, nor have they been required to do so. Before Applicant’s counsel would entertain signing the NDA, he sought further disclosure of terms in the Respondent’s employment contract (e.g., definition of contractor/representative, confidentiality, company and business). He sought a copy of the definitions section of the employment contract, and the identification of the parties who are privy to the employment contract.
21The Respondent states he is concerned about disclosure to the Applicant in this case without an NDA (although it appears some confidential disclosure has since been provided to the Applicant without her signing the NDA).
22The Respondent is not satisfied with merely relying on the deemed undertaking rule for two principal reasons. First, the Applicant’s previously retained law firm was involved in a transaction to transfer ownership of the matrimonial home from joint ownership to a different ownership. He states this was without his consent. This error has since been corrected. Secondly, it appears an administrative assistant cut and pasted the Respondent’s signature on a consent document to release CAS records. While the Respondent consented to the release of CAS records, he did not authorize affixing his signature to the form that was completed. This also appears to have been an administrative error. These instances have eroded the Respondent’s trust in the Applicant to maintain confidential information confidential.
23On July 19, 2024, further disclosure was provided by the Respondent.
24On July 25, 2024, Mr. Pont delivered a letter outlining what he understands remains outstanding.
Analysis
i. Item 1 of Mr. Pont’s July 25, 2024 Letter
25Item 1 in Mr. Pont’s letter of July 25, 2024 seeks the following disclosure:
Supporting documentation outlining the terms and conditions with respect to the deferred revenue reported on 2788775 Ontario Inc.’s (“278”) balance sheet of $586,431 as at April 25, 2021 and $847,500 as at October 13, 2021, and supporting documentation outlining the changes to the terms since it was initially provided.
A copy of notes related to the loan payable reported on 278’s balance sheet as at April 25 and October 13, 2021 in the amount of $1 million, and any other supporting documentation outlining the terms and conditions.
Mr. Pont states this information is relevant to determine the fair market value of the liabilities claimed totaling $1.5 million to $2 million as at April 15, 2021 and October 13, 2021 (i.e. the valuation dates).
Mr. Pont acknowledges that the Respondent provided various explanations regarding the terms and conditions of the $1 million in notes payable, however explanations provided were unclear and did not provide us with the information that would provide us with the ability to calculate their fair market value.
26It is difficult to assess the relevance of this information without a clearer and better explanation of its relevance. The space used in the Applicant’s affidavit ought to have focussed on relevance and proportionality, instead of recopying correspondence between counsel. At best, at para 14 of the Applicant’s affidavit she explains that the Respondent has an interest in 278 and 10000311938 Ontario Inc. (“100”), without explaining any information about the Respondent’s relationship to these numbered companies. It is only in her final paragraph of her affidavit that she discloses he works at JLL. Nonetheless, I understand from Respondent’s counsel there is a willingness to produce this information provided an NDA is signed.
27To the extent any of this disclosure remains outstanding, I order it be disclosed to the Applicant within 30 days of the Applicant, her lawyer and law firm, her expert and any other third party retained by the Applicant for this litigation signing the non-disclosure agreement found at Exhibit O of the Respondent’s affidavit, sworn July 24, 2024.
28I make this order for the following reasons.
29The Respondent has provided a sufficient extract from the Respondent’s employment contract to demonstrate that he is subject to a confidentiality clause with penalties in the event of a breach. It is not uncommon for family litigants who are employed or earn income from other third parties to be subject to a confidentiality clause. At the same time, family litigants have a very positive obligation of financial disclosure. Such litigants are in an unenviable option of breaching their contractual obligations or their duty of financial disclosure.
30The deemed undertaking rule (r. 20(24) Family Law Rules) provides litigants with assurances that information will not be used for a purpose other than for the proceeding in which the information and evidence is obtained. However, the deemed undertaking rule is a promise from one party to another. It provides little assurance for third parties, such as an employer or other third party who has contracted with the family litigant, and which contract may include trade secrets, industry specific confidential information, or other commercially sensitive information.
31Furthermore, the deemed undertaking rule is subject to exceptions found in rule 20(25) FLR. That rule permits the use of information for other purposes if the evidence is filed with the court or referred to at a hearing, or to impeach the testimony of a witness in another case. As such, the deemed undertaking rule can have minimal efficacy in protecting third party information.
32For this reason, NDA’s can provide a family litigant with protection vis-à-vis their contractual obligation of confidentiality to third parties, while permitting such litigants to honour their duty of financial disclosure. They have been ordered in certain cases: Burton v. Burton, 2016 ONSC 62 at paras. 141-144.
33The draft NDA prepared by Respondent’s counsel has no offensive or troubling language. There is nothing in it that would prevent the Applicant’s counsel from reviewing with his client information that is disclosed. There is no presumptive penalty or liability imposed for breach – although it is expected that lawyers and experts will honour their commitments in an NDA. It expressly permits the Applicant to share information with other third-party experts the Applicant seeks to retain, provided they also execute the NDA prior to the release of information to them.
34I disagree with Mr. Rosenberg that he must see additional portions of the employment contract before he would sign the NDA. The disclosure of the terms that he seeks, in and of itself, may constitute a breach of the Respondent’s confidentiality obligation in the employment contract. If the Applicant is already bound by the deemed undertaking rule, I fail to appreciate what risks or prejudice an NDA would create for her.
35If, after signing the NDA and the resulting disclosure, there is no settlement, there is the prospect that confidential information may come up at trial or within filed documents. The result is that third party confidential information may become part of the public record.
36As such, the Respondent seeks an order that the Applicant shall not oppose any motion brought by the Respondent, 278, 100, or JLL (the “Third Parties”) to seal and/or redact documents relating to these Third Parties. I find it is premature to make such an Order. I remain hopeful that through further disclosure and settlement discussions, this case will not require adjudication where confidential information may form part of the court record. Leave is granted to the Respondent and the Third Parties, however, to seek such relief should it become necessary.
37To further protect disclosure of confidential Third Party information, and as a necessary interim measure, I grant an Order that the Applicant shall not file with the Court financial disclosure disclosed by the Respondent with respect to the Third Parties without first providing the Respondent and the Third Parties with at least 30 days written notice of her intention to do so, to permit the Respondent and the Third Parties to request from the Court that confidential information be redacted or sealed. While I grant this Order, it would be preferable for the parties to simply agree in advance to redacting confidential information as requested by the Respondent and Third Parties. This Order also encourages parties to discuss this case as between counsel, which does not appear to be occurring.
ii. Item 2 of Mr. Pont’s July 25, 2024 Letter
38Mr. Pont requested, and the Respondent has been trying, to obtain a copy of a bill of sale relating to his 2014 Porsche. A response has been provided, indicating that the bill of sale would be in the matrimonial home and that he was unable to obtain the document from the home, but that he made a request from the dealer.
39Mr. Pont states that the Respondent has not provided supporting documentation to establish method of payment for the Porsche. He states it was included in the initial January 16, 2024 RFI. Ms. Compeau, at the motion, indicated that this was a new request. Mr. Rosenberg stated it was not a new request and was included in the January 16, 2024 RFI.
40The relevant portion of the January 16, 2024 RFI, reads:
49(b) Confirmation that the Porsche was received as a benefit for real estate transaction(s) in which services were rendered by Mr. Denda/278 Ontario and that Mr. Denda did not pay any monies to acquire the Porsche. Alternatively, please provide the bill of sale and supporting documentation for the amount paid to acquire the Porsche.
41Upon review this request, I can see how it would not have been clear to the Respondent that Mr. Pont was seeking supporting documentation to establish method of payment for the Porsche. Had the parties picked up the phone, perhaps this could have been settled without the Court wasting ink.
42It is clear that in February and April 2024, Ms. Compeau did indicate that the bill of sale was located at the matrimonial home and that the Applicant had obstructed the Respondent’s access to it. This is not a case of the Respondent simply ignoring requests for disclosure for months.
43If the Porsche were acquired by the Respondent in lieu of compensation, it would have an impact on his income for support purposes. Therefore, it is relevant and it is proportionate to require the Respondent to exercise best efforts to obtain this information.
44I order the Respondent, within 30 days, to exercise best efforts to search for and provide a copy of the bill of sale for the Porsche, along with proof of method of payment, and to provide the Applicant with a summary of his efforts.
iii. Item 3 of Mr. Pont’s July 25, 2024 Letter
45Mr. Pont seeks disclosure of the Respondent’s personal bank/investment statements for the period of January 1, 2020 to date. The Respondent had indicated he is willing to provide bank statements from 2021 to date. Mr. Pont states he requires information from January 1, 2020 which is relevant given that the Respondent’s expert has prepared an income report for the years 2014 to 2021. This information is needed to confirm the Respondent’s representation he has no other sources of income and to reconcile the shareholder loans between the Respondent’s business interests and his personal accounts.
46I agree that this is a relevant and proportionate disclosure.
47At the motion, Respondent’s counsel advised that the Respondent has requested copies of his personal bank/investment statements going back to January 2020, but that it may take up to six weeks to obtain these records from the financial institutions.
48I order the Respondent, within 30 days, to provide the Applicant with proof of his request for personal bank/investments statements going back to January 1, 2020, and that he provide any such statements to the Applicant once received.
iv. Item 4 of Mr. Pont’s July 25, 2024 Letter
49Mr. Pont requests a letter from JLL outlining all compensation paid to the Respondent/278, relating to transactions that occurred outside of Ontario in each of the years 2018 to 2023. The Respondent has asked for the relevance of such information.
50Mr. Pont explains that 278 has deducted significant travel expenses totaling $8,000 to $42,000 from 2020 to 2023, which the Respondent states relates to client work with JLL in various jurisdictions where he is not a licensed agent, such as Las Vegas, Arizona, Florida and Montreal. The requested information from JLL would assist us in corroborating the Respondent’s representation that various travel expenses related to JLL clients are business related.
51Again, because there is no factual evidence of the relationship between the Respondent, 278 and JLL, it is difficult to understand the relevance of this request.
52The Respondent’s position is that this request is de minimis, and improperly engages the Respondent’s employer, JLL.
53I order the Respondent, within 30 days, to write to JLL to request it provide him with a letter explaining how the trips taken by the Respondent between 2020 to 2023 were related to JLL’s clients and are business related, and that he provide a copy of such letter to the Applicant, along with any response received from JLL.
54In my view, this is not a burdensome request.
v. Item 5 of Mr. Pont’s July 25, 2024 Letter
55Mr. Pont seeks information to quantify any personal benefits to the Respondent of using houses that are/were owned by 278 as the Respondent’s office (i.e. 240 Broadway Ave., Unit 7, and 331 Laird Avenue). This is because the Respondent is alleged to have deducted significant expenses relating to these properties (e.g., property taxes, utilities, insurance, furniture). Mr. Pont says answers received are only partially answered or not answered at all.
56Mr. Pont seeks information about where the Respondent has resided in 2022/2023. He wants to know what total square footage of the portion of the houses are used for business purposes and details of the rooms used for business purposes. The Respondent has advised that 50% of these properties are used by the corporation for business purposes, but Mr. Pont says this does not answer his inquiry. Finally, he asked how often the Respondent has met with clients in these two properties and the matrimonial home. The Respondent has answered that client meetings can occur at any day of the week and can occur 1 to 6 times per week. Mr. Pont is not satisfied with this answer.
57The Respondent states that these new inquiries are different than the last request for information. He states he has provided sufficient answers in a letter from his counsel from July 12, 2024 at para. 59, which I have reviewed. I am satisfied that he has provided a sufficient response to these questions, and that the additional information requested is not proportionate, except that I order the Respondent to advise the Applicant within 30 days where he resided in 2022/2023. This does not appear to have been answered previously, although it is unclear whether it was asked previously.
Order sought by Applicant
58I decline to order the blanket order sought by the Applicant that the Respondent produce within 21 days the outstanding disclosure/information set out in Mr. Pont’s January 16, 2024 RFI that has been updated. This is a vague request for disclosure and too imprecise to be enforceable. Based on Mr. Pont’s notations, the Respondent has answered most of the requested disclosure, and it is only certain follow-up requests that remain outstanding. There may be other disclosure outstanding. I would have made orders for other specific items of disclosure had it been clearly explained in a chart, and had the Applicant met her burden of demonstrating its relevance and proportionality.
Other relief sought in the Respondent’s Motion
59I order that para. 22 of the Applicant’s affidavit, sworn July 22, 2024, be struck because it contains privileged settlement communication. It matters not that such communication is not marked as being privileged. It clearly contains an offer.
Costs
60The Applicant submitted a bill of costs totalling $24,423.82. The Respondent submitted a bill of costs totalling $7,700.95.
61While the Applicant was successful in obtaining orders for disclosure of certain information, the relief granted was limited to specific items of disclosure, and some of the disclosure was subject to the Applicant signing an NDA, which she opposed. In this respect, the Respondent was successful in obtaining relief he sought. Had there been communications between the parties, as required, I am satisfied that this motion could have been avoided, or at least, could have been more focussed. The Applicant took unreasonable positions. The Applicant should not be rewarded for behaviour.
62In contrast, I found that the Respondent had produced voluminous disclosure and had provided timely responses to virtually all requests for information. The very minor outstanding disclosure issues could have been better dealt with at a case conference. Some of the items requested were new or would not have been clearly known to the Respondent because the Applicant’s motion material was so poorly prepared. Significant resources were spent by the parties, court time was wasted, and now a 12-page decision has been written.
63The Applicant’s offer to settle, dated July 9, 2024, contained no compromises. She sought a blanket order that the Respondent answer all outstanding disclosure by July 12, 2024, even though Mr. Pont had not completed his list of outstanding disclosure by July 25, 2024 (although I recognize that some disclosure was not provided until July 19, 2024).
64The Respondent’s offer to settle, dated July 23, 2024, sought the adjournment of this motion to a case conference, scheduled for July 31, 2024. This was a reasonable and appropriate outcome. The other items in his offer to settle were very reasonable and would have guaranteed disclosure of various items by July 29, 2024 or August 2, 2024.
65This is an appropriate case to award costs to the Respondent, even though the Applicant was successful in obtaining some relief. I have documented earlier in my decision the poor quality of the motion material and the practice concerns. It is appropriate to award costs on a higher scale in the circumstances.
66Having considered the above, and rules 18 and 24 of the Family Law Rules, I order the Applicant to pay the Respondent’s costs of this motion fixed in the amount of $7,500 payable within 30 days.
Order to Go as Follows:
Items within the first bulleted item of Mr. Pont’s July 25, 2024 letter shall be answered by the Respondent within 30 days of the Applicant, her lawyer and law firm, her expert and any other third party retained by the Applicant for this litigation signing the non-disclosure agreement found at Exhibit O of the Respondent’s affidavit, sworn July 24, 2024.
The Applicant shall not file with the Court financial disclosure disclosed by the Respondent with respect to 2788775 Ontario Inc., 10000311938 Ontario Inc., or Jones Lang LaSalle Real Estate Services Inc., (collectively, “the Third Parties”) without first providing the Respondent and the Third Parties with at least 30 days written notice of her intention to do so, to permit the Respondent and the Third Parties to request from the Court that confidential information be redacted or sealed.
The Respondent shall, within 30 days, exercise best efforts to search for and provide a copy of the bill of sale for the Porsche, along with proof of method of payment, and to provide the Applicant with a summary of his efforts.
The Respondent shall, within 30 days, provide the Applicant with proof of his request for personal bank/investments statements going back to January 1, 2020, and he shall provide any such statements to the Applicant once received.
The Respondent shall, within 30 days, write to JLL to request it provide him with a letter explaining how the trips taken by the Respondent between 2020 to 2023 were related to JLL’s clients and are business related, and he shall provide a copy of such letter to the Applicant, along with any response received from JLL.
The Respondent shall, within 30 days, advise the Applicant where he resided in 2022/2023.
Paragraph 22 of the Applicant’s affidavit, sworn July 22, 2024, is hereby struck.
The Applicant shall pay the Respondent costs of this motion, fixed in the amount of $7,500, payable within 30 days.
Justice M. Sharma Date: August 16, 2024