In this judgement of the Ontario Court of Appeal, Justice Tulloch writing on behalf of a three-judge panel reviews the legal test for striking a party's pleadings for failure to produce financial disclosure pursuant to Court Orders.
The parties were married in August, 1991, and separated 19 years later on January 27, 2010. There were two children of the marriage, a daughter and son, who were 18 and 16, respectively, at the time of the appeal.
The Appellant Husband is a dentist who also invests extensively in rental real estate properties throughout Canada and internationally. Throughout the marriage, the Respondent Wife provided bookkeeping services for her husband's dental practice; other than that, however, she did not work outside the home since the parties married. The parties' post-separation relationship became acrimonious, with the Wife making allegations of infidelity and the Husband making allegations that the Wife suffered from substance abuse issues that had contributed to the marriage breakdown.
Following the parties' separation, the Wife brought an application seeking financial relief. As Justice Tulloch recognized, "the main controversy that... plagued the application [was] the issue of financial disclosure to be provided by the husband." Prior to the Wife's motion to strike the Husband's pleadings, the Superior Court had issued at least three orders relating to the husband's financial disclosure.
The motion judge, Justice Snowie, found that "the Husband had provided "token" disclosure only, and that he was in wilful breach of the three previous [disclosure] orders." Justice Snowie wrote,
It is clear to this court the Father considers himself above the law and has repeatedly “thumbed his nose” at the outstanding court orders. It appears to be a “game” of “power and control” for the father. He has made little effort to comply with this court’s order for the last 2 1/2 years as witnessed by the outstanding disclosure (15 pages) attached to this endorsement as Schedule “A”...He has produced a “handful” of documents here and there in order to feign compliance...The disclosure he has made is of little value.
Justice Snowie ordered that the Husband's pleadings be struck, and that the matter proceed by way of an uncontested trial.
The Husband appealed the decision of the Superior Court, arguing that the motion judge "made findings of fact that were not supported by the evidence, and failed to apply relevant legal principles to consider alternative, less extreme remedies." The Husband asserted that he had provided explanations for his non-compliance and sought to set aside the portions of Justice Snowie's Order striking his pleadings and allowing the matter to proceed to uncontested trial.
On appeal, the Husband took the position that he had substantially complied with the disclosure obligations set out in the three prior Court Orders. The Husband further submitted that various other factors had contributed to a perceived lack of disclosure, including:
- the Wife had changed counsel on three occasions since commencing proceedings and this contributed to her inability to track the documentation that he provided;
- the Wife made it difficult for him to access his computer and documents left in the matrimonial home;
- the Wife was the bookkeeper and failed to enter financial information into the accounting program for many months, impeding his ability to provide the information requested; and
- the Wife was aware that he was involved in legal proceedings with his former accountants, and those proceedings included a request for the return of his files. Eventually, the Husband got an Order compelling his former accountants to release his files, and those files were subsequently provided to the Wife.
As a preliminary matter, Justice Tulloch denied the Wife's request to not entertain the appeal by reason that an appellate court has the discretion to refuse to hear the appeal of a party who continues to be in wilful breach of an Order. The court held that because one of the Husband's primary arguments was that the motion judge erred in finding that he had wilfully breached court orders for disclosure, it was necessary to consider the merits of the appeal.
Justice Tulloch then examined the law surrounding the striking of pleadings, finding that pleadings should only be struck, and trial participation denied, in exceptional circumstances and where no other remedy would suffice. Although Justice Tulloch recognized that an appellate court ought not to interfere with a motion judge's properly exercised discretion to strike pleadings, he was of the view that, in the case at bar, the motion judge's findings as to the Husband's attitude and disclosure provided "were erroneous."
There was evidence that the husband had provided a considerable amount of the disclosure specifically ordered by Eberhard, Thompson and Goodman JJ. in their respective orders. In addition to identifying allegedly outstanding disclosure, the wife’s affidavit dated July 24, 2012, acknowledges the records that had already been produced...The efforts made by the husband to comply with the court orders were more than just token attempts at compliance. Keeping in mind that the husband’s financial situation is considerably more complex than that of the average family law litigant, it is apparent from the record that the husband had been making serious efforts to comply with his disclosure obligations.
As such, the Court ordered that "justice would be best served in this case by allowing the husband to participate at trial." In the end, the Court of Appeal allowed the Husband's appeal and awarded him costs on a partial indemnity basis.