



COURT OF APPEAL FOR ONTARIO

CITATION: Manchanda v. Thethi, 2021 ONCA 127

DATE: 20210301

DOCKET: C66823

Strathy C.J.O., Brown and Miller
    JJ.A.

BETWEEN

Jastinder
    Manchanda

Applicant (Appellant)

and

Sukhvir
    Thethi

Respondent (Respondent)

Stephen P. Kirby and Gary S. Joseph,
    for the appellant

Richard H. Parker, Q.C., for the
    respondent

Heard: February 8, 2021 by video conference

On appeal from the order of Justice
    Patrick J. Monahan of the Superior Court of Justice, dated March 21, 2019, with
    reasons reported at 2019 ONSC 1749, and the costs order dated July 12, 2019,
    with reasons reported at 2019 ONSC 4239.

REASONS FOR DECISION

[1]

This matter comes before the court a second
    time. On the first occasion, this court dismissed the respondents appeal from
    an order striking his pleadings as a result of his willful non-compliance with
    court orders, including orders to make financial disclosure:
Manchanda v.
    Thethi
, 2016 ONCA 909, 84 R.F.L. (7th) 374. The court observed that the
    parties had been engaged in high conflict matrimonial litigation, which gave
    rise to countless court attendances resulting in court orders from at least
    ten different judges.

[2]

The matter eventually proceeded to an
    uncontested trial, which the respondent was permitted to attend as an observer.

[3]

The appellant appeals various aspects of the
    trial judges disposition of her claims. We deal with each of her complaints
    below. In overview, we see no error in the trial judges thorough reasons.
    Before turning to the grounds of appeal, we address whether the respondent is
    entitled to make submissions on the appeal.

No right of audience

[4]

The appellant submits that the respondent should
    not be permitted to participate in the appeal. She describes the appellant as a
    serial violator of court orders. The respondent also remains in default of
    approximately $45,000 of court ordered costs. This courts decision in
Abu-Saud
    v. Abu-Saud
, 2020 ONCA 824, reaffirmed that an audience will not be
    granted to a party who is in default of court orders: see also
Dickie v.
    Dickie
, 2007 SCC 8, [2007] 1 S.C.R. 346, at para. 6. In
Murphy v.
    Murphy
, 2015 ONCA 69, 56 R.F.L. (7th) 257, the party in default was the
    respondent to the appeal, as is the case here.

[5]

After hearing the appellants submissions, and
    submissions from the respondents counsel on the issue of his clients standing
    on the appeal, we concluded that the respondents default was both deliberate
    and willful. We advised the respondents counsel that we would not hear
    submissions from him. Nor would we consider a document he had filed with the
    court on the day of the appeal, purportedly containing a calculation of the
    equalization payment.

First ground: trial judge allowed respondent
    to participate indirectly

[6]

The
Family Law Rules
, O Reg 114/99,
    provide that the court may deal with a partys failure to follow the rules,
    including a failure to make proper disclosure, by striking out any or all
    documents filed by that party. This consequence stems from the need to sanction
    and deter non-disclosure of assets, which has been described as the cancer of
    family law:
Leskun v. Leskun
, 2006 SCC 25, [2006] 1 S.C.R. 920, at
    para. 4, citing
Cunha v. Cunha
(1994), 99 B.C.L.R. 93 (S.C.).

[7]

The appellant submits that the trial judge
    imposed an unfair evidentiary burden on her and erred in failing to draw
    adverse inferences against the respondent where his documents had been struck.
    As a result, the appellant claims that the trial judge ultimately allowed the
    respondent to benefit from his own misconduct.

[8]

In
Meade v. Meade
(2002), 31 R.F.L.
    (5th) 88 (Ont. S.C.), Kiteley J. held that where disclosure is inadequate and
    inferences must be drawn, they should be in favour of the compliant party: at
    para. 81. The appellant submits that the trial judge failed to abide by this
    principle. The appellant also submits that the trial judge failed to recognize
    that once the respondents documents were struck, the documents of the compliant
    party should be accepted.

[9]

The appellant cited three instances in which the
    trial judge failed to accept the information in her documents: her claim to a
    constructive or resulting trust in the rental property, the respondents
    percentage of ownership of his company, A4U Limited, and the appellants
    valuation of the matrimonial home. In doing so, the appellant submits the trial
    judge permitted the respondent to re-enter the proceeding.

[10]

We disagree. Rule 1(8.4) of the
Family Law
    Rules
, which establishes the consequences of striking out documents, does
    not automatically exclude the defaulting party from the proceeding. Instead, it
    intentionally removes the partys
entitlement
to
    notice and participation. The court may nevertheless permit participation by
    the defaulting party, to the extent it will assist the court.

[11]

Referring to para. 81 of
Meade
, the
    trial judge acknowledged that in view of the respondents failure to make
    adequate financial disclosure, there is broad discretion for a court to draw
    reasonable inferences for the purpose of resolving property issues or imputing
    income. Contrary to the appellants assertion, the striking of the
    respondents documents did not mean that the trial judge was compelled to
    accept her evidence at face value. In an uncontested trial, the trial judge was
    entitled, indeed required, to probe the appellants evidence to ensure a just
    result.

[12]

As this court stated at para. 49 of
Purcaru
    v. Purcaru
, 2010 ONCA 92, 75 R.F.L. (6th) 33 and confirmed in
Mullin
    v. Sherlock
, 2018 ONCA 1063, 19 R.F.L. (8th) 1: the objective of a
    sanction ought not to be the elimination of the adversary, but rather one that
    will persuade the adversary to comply with the orders of the courtThis is
    because denying a party the right to participate at trial may lead to factual
    errors giving rise to an injustice.

[13]

The principle from
Purcaru
is
    applicable here. It is apparent from the record that the appellants own
    documentation was deficient in many respects, that she was over-reaching in
    some respects, and that her evidence shifted in the face of the trial judges
    inquiries. From our observations of the record, the trial judge did not impose
    an unfair burden on the appellant. On the contrary, he wanted to be satisfied
    that his findings of fact were based on credible and reliable evidence.

[14]

Pursuant to Rule 2 of the
Family Law Rules
,
    trial judges in family law proceedings have great latitude to use their
    discretion to adjudicate cases fairly:
Titova v. Titov
, 2012 ONCA 864,
    29 R.F.L. (7th) 267, at para. 48. The trial judges approach appropriately
    reflected the courts obligation to guard against the risk of factual errors in
    the face of only one partys evidence and documents.

Second ground:
    constructive trust

[15]

The appellant submits that the trial judge erred
    in failing to recognize a constructive trust in her favour. She submits that
    the issue of net family property and constructive trust are linked. In the net
    family property calculation, the trial judge reduced the value of the
    matrimonial home from the current value to the value on valuation day. The
    appellant submits that the value she put forward reflected her contribution to
    the property and that the trial judges reduction of the property value failed
    to acknowledge her contributions  contributions that, the appellant submits,
    are tied to the constructive trust.

[16]

The appellant concedes that in the vast majority
    of cases, a married couples division of property will be governed by the net
    family property statutory scheme. However, in some circumstances, a party may
    seek the equitable remedy of a constructive trust. In this case, the appellant
    submits that the trial judge should have recognized that a trust was created
    through unjust enrichment. She submits that this is an appropriate case to
    recognize a constructive trust because her contribution to the business of the
    rental property, including financial contribution, was substantial.

[17]

The trial judge noted that in family law cases
    there is an expectation that the net family property calculations will address
    unjust enrichment. However, the appellant submits that unjust enrichment is not
    always addressed in the statutory scheme:
Martin v. Sansome
, 2014 ONCA
    14, 118 O.R. (3d) 522. For example, the net family property equalization does
    not account for unjust enrichment when there is a significant increase in value
    due to one partys contribution. The appellant submits that her contributions
    were ignored and that this constitutes a reviewable error. The appellant
    submits that she met the test for unjust enrichment, and that the trial judge
    failed to properly engage with the test, simply saying that the appellant
    failed the test.

[18]

We disagree. The trial judge considered the
    appellants submissions and held that this was not an exceptional case as
    described in
Martin
. In this case, any unfairness that might otherwise
    arise out of unequal contribution could adequately be addressed by the equalization
    of net family property. The trial judges conclusion is consistent with s. 5(6)
    of the
Family Law Act
, R.S.O. 1990, c. F. 3.

Third ground: spousal support

[19]

The appellant submits that the trial judge
    failed to acknowledge that loss of opportunity factors are not the only
    factors to be considered in a compensatory spousal support claim. The appellant
    submits that compensatory support should also address sacrifices and
    contribution. The appellant contributed to the rental business by collecting
    rent and dealing with defaulting renters, among other things. The appellant
    submits that the trial judge failed to recognize these contributions and
    articulated a narrow definition for compensatory support. In the appellants
    submission, this was an error and ignores the second half of s. 15.2(6) [of
    the
Divorce Act
, R.S.C. 1985 c. 3. (2nd Supp)].

[20]

In our view, the trial judge did not err. The
    trial judge specifically acknowledged, at para. 58 of his reasons, the
    expansive approach to considering a compensatory basis for spousal support.
    He simply found that, based on the facts before him, the appellant failed to
    establish an entitlement to spousal support on compensatory or other grounds.
    His conclusion is entitled to deference.

Fourth ground:
    vesting order

[21]

The trial judge dismissed the appellants
    request for an order pursuant to s. 9(1)(d) of the
Family Law Act
. The
    appellant sought an order that a property owned by the respondent, valued at
    $870,000, be transferred to her in satisfaction of the judgment if the
    respondent had not paid the judgment within 120 days. In rejecting this relief,
    the trial judge reasoned that such an order would constitute a windfall to the
    appellant because the value of the property exceeded the amount of the
    judgment. He also noted that there could be third parties with an interest in
    the property.

[22]

The appellant submits that this was an
    appropriate case for a vesting order due to the respondents persistent
    breaches of court orders. She acknowledges that granting a vesting order is
    discretionary, but submits that the trial judge should have imposed a partial
    charge on the property. The appellant concedes that this option was not
    proposed to the trial judge.

[23]

The trial judge cannot be faulted for failing to
    grant a remedy that was not requested at trial. We would not interfere with the
    exercise of his discretion.

Fifth ground: costs

[24]

In the event the appeal is dismissed, the
    appellant seeks leave to appeal the costs award. She submits that the costs
    award was unreasonably low and had the effect of punishing her for the respondents
    misconduct.

[25]

We do not agree. The trial judge awarded costs
    of $80,000, all-inclusive, about half the amount claimed by the appellant on a
    full indemnity basis. He found that while the rates charged by counsel were
    reasonable, and much of the time spent was necessary, the costs award should
    reflect the fact that many of the appellants claims were rejected in whole and
    in part. He also found that the appellant conducted the litigation in a way that
    needlessly added to its length and complexity.

[26]

In arriving at the costs award, the trial judge
    considered the relevant principles in Rule 24(12)(a) of the
Family Law
    Rules
. The appellant has identified no error in principle and no error in
    the exercise of the trial judges discretion. We dismiss the application for
    leave to appeal costs.

Disposition

[27]

For these reasons, the appeal is dismissed. In all
    the circumstances, we make no order as to costs.

G.R.
    Strathy C.J.O.

David
    Brown J.A.

B.W.
    Miller J.A.


