



COURT OF APPEAL
    FOR ONTARIO

CITATION: Wouters v. Wouters, 2018 ONCA 26

DATE: 20180116

DOCKET: C63520

Simmons, Cronk and Paciocco JJ.A.

BETWEEN

Theresa Ann Mary Wouters

Applicant

(Respondent)

and

Eddy Daniel Jules Wouters

Respondent

(Appellant)

Jennifer Suzor, for the appellant

George McFadyen, for the respondent

Heard: December 11, 2017

On appeal from the order of Justice P.B. Hockin of the
    Superior Court of Justice, dated February 22, 2017, with reasons reported at
    2017 ONSC 1241.

REASONS FOR DECISION

Introduction

[1]

The appellant husband
    appeals from an order, dated February 22, 2017, (the February 2017 order) under
    which the motion judge:

i)

struck a reply factum filed by the husband;

ii)

rectified an overpayment of trust funds to the
    respondent wife by applying the overpayment to an underpayment of support
    payments; and

iii)

struck the husband's pleadings for failure to
    obey court orders.

[2]

The husband was
    self-represented on the motions that led to the February 2017 order, which were
    heard on February 1, 2017. The wife had counsel.

[3]

In addition to the above
    orders, at the motion hearing, the motion judge refused to permit the husband
    to lead oral evidence from his accountant because the husband had not complied
    with a condition in a December 22, 2016 order (the December 2016 order)
    permitting him to lead such evidence. The condition required the husbands accountant
    to send a letter to the wifes counsel outlining his intended evidence by
    January 20, 2017. However, although the requirement to send the letter to the
    wifes counsel was included in the formal order entered on January 30, 2017 and
    was mentioned on one occasion during the oral hearing at which it was made, it
    was not included in the handwritten endorsement of the December 2016 order, on
    which the husband relied.

[4]

Both parties were represented on
    appeal. At the appeal hearing, counsel agreed that, in fact, there was no
    overpayment of trust funds as described in para. 2 of the February 2017 order
    and also agreed that para. 2 of that order should be set aside in its entirety on
    consent.

[5]

In our view, the appeal from that
    part of the February 2017 order striking the husbands pleadings must be
    allowed for three reasons.

[6]

First, the appellant was denied
    the opportunity to respond fully to the wifes motion to strike. Second, the
    motion judge overstated the wifes efforts to move the case on to trial. Third,
    in the context of not having a full picture of the husbands position, the
    motion judge failed to properly consider whether any lesser remedy would
    suffice.

[7]

Before turning to these reasons,
    we will briefly review some of the background leading up to the February 2017 order.

Background

[8]

The parties were married in 1996 and separated
    in 2007. They have three children, ranging in age from 15 to 20.

[9]

The wife commenced a divorce proceeding in
    February 2008. Since that date, multiple motions have resulted in numerous
    court orders.

[10]

Among other things, the parties' farm property,
    which was held in the name of a corporation, has been sold. The wifes counsel
    is holding the net proceeds of sale (originally $440,600.41) in trust, subject
    to an order to pay child and spousal support to the wife from the net proceeds
[1]
with the payments to be
    credited against the husbands interest in such proceeds.

[11]

The parties house and associated 3.8 acres of
    land has also been sold; the husbands counsel is holding the net proceeds of
    sale ($265,111.72) in trust.

[12]

Following a settlement conference in January
    2014, the wife obtained a final order for custody of the parties' children. No
    access to the children was ordered for the husband.

[13]

This proceeding first came on for trial in
    September 2015. With the consent of the wifes counsel, the trial did not
    proceed  the husband could not attend because he was in jail in the United
    States.

[14]

The matter next came on for trial at a September
    6, 2016 sitting of the Superior Court in Sarnia.

[15]

On September 7, 2016, the wife brought a motion
    returnable September 12, 2016 to adjourn the trial and for disclosure from the
    husband. The motion judge adjourned the trial to November 7, 2016 and ordered
    the husband to produce the following items within 30 days, failing which the
    wife could move to strike his pleadings (the September 2016 disclosure order):

-       income tax returns and notices of assessment for 2010 to
    2015, subject to the proviso that the notices of assessment would not be
    available within 30 days;

-      a statement of year-to-date gross earnings from all income
    sources in 2016;

-      an up-dated financial statement; and

-      a net family property statement and brief of supporting
    documents.

[16]

On October 12, 14, and 20, 2016, the husbands
    counsel sent correspondence to the wifes counsel in which she explained that
    the husband's accountant (who was also the accountant for the corporation that
    owned the farm) required certain information about the trust funds held by the
    wife's counsel to complete tax returns for the husband and the corporation. She
    also explained that she could not complete the husbands financial statement
    for the same reason. In that correspondence, the husbands counsel also purported
    to forward date of marriage financial information and draft financial
    statements for the corporation. Counsel's October 12, 2016 correspondence
    enclosed a letter from the husband's accountant questioning certain payments
    made to the wife from the trust account held by the wife's counsel.

[17]

On November 4, 2016, the wife's counsel sent a
    letter to the husband's counsel explaining that, as a result of an error, the
    wife had been overpaid $53,996.19 from the net proceeds of sale of the farm. The
    wifes counsel proposed that the overpayment be rectified by treating the
    support payments as being in arrears  because they were being paid from joint
    funds  and by applying the overpayment to outstanding arrears. The wifes
    counsel also moved on October 25, 2016 to adjourn the November 7, 2016 trial
    date by motion returnable that day. The supporting affidavit indicated counsel
    had agreed to the adjournment. The husband subsequently discharged his counsel
    due to lack of funds. Nonetheless, the trial scheduled for November 7, 2016 was
    adjourned on consent to a date to be fixed by the trial coordinator. The trial
    was to be scheduled as soon as practicable but taking account of the fact that
    the husband had not yet complied with the September 2016 disclosure order.

[18]

On November 18, 2016, the husband brought a
    motion returnable November 24, 2016, requesting a full accounting from the
    wife's counsel of the proceeds of sale of the farm property and seeking damages
    from the wifes counsel for breach of fiduciary duty and fraud. The husband
    attached to his affidavit certain documents that he did not identify in his
    affidavit but which purport, on their face, to be copies of proposed personal
    and corporate tax returns and corporate financial statements for years that
    include 2010 to 2015. In addition, he attached a letter, dated November 14,
    2016, from his accountant to the wifes counsel, purporting to enclose the
    husbands personal tax returns for 2007 to 2015 and corporate financial
    statements and tax returns for the same period.

[19]

In response to the husband's affidavit, the
    bookkeeper/accountant for the wife's counsel delivered an affidavit in which
    she explained that she had mistakenly paid $53,996.19 to the wife from the
    trust funds being held by the wife's counsel as a result of confusion about the
    terms of certain court orders for the release of funds. She also asserted that,
    unless an adjustment was made, the wife was effectively paying support to
    herself because the ongoing support payments were being deducted from joint
    funds.

[20]

On November 22, 2016, the wife brought a motion
    returnable on December 8, 2016 seeking, among other things, an order striking
    the husband's pleadings for failing to comply with various court orders (the
    September 2016 disclosure order and prior orders, dated January 30, 2014, June
    14, 2012, August 25, 2011, and August 30, 2012, under which the husband had
    been ordered to: provide information concerning his attempts to obtain
    employment and the terms of the employment he had obtained; answer undertakings;
    and provide evidence that he was maintaining certain insurance policies in
    place).

[21]

In the same motion, the wife also asked for an
    order rectifying the overpayment of support of $53,996.19 by setting it off
    against support payments of $77,371.10, which she asserted had been paid from
    her share of the funds held in trust.

[22]

On December 12, 2016, the husband brought a
    motion returnable December 15, 2016 seeking a payout of $50,000 from the
    proceeds of sale of the farm property held in trust by the wife's counsel.

[23]

On December 15, 2016, the husband brought a
    motion returnable December 22, 2016, requesting leave to call oral evidence
    from his accountant on his motion for an accounting.

[24]

With the exception of the December 22, 2016
    motion, all the motions were dealt with on February 1, 2017.

[25]

On December 22, 2016, the motion judge granted
    leave, in the December 2016 order, to the husband to call oral evidence from
    his accountant, subject to two conditions and subject to the further direction
    of the motion judge presiding at the motion on February 1, 2017. First, the
    accountants evidence in-chief would not exceed 30 minutes. Second, the
    accountant would provide a letter to the wifes counsel by January 20, 2017, outlining
    his intended evidence. However, as noted above, although the motion judge
    stated the latter condition on one occasion orally
[2]
, neither his handwritten
    endorsement nor a typed transcription included the requirement that the
    accountants letter go to the wifes counsel.
[3]

[26]

The December 2016 order also required the
    husband to produce proof that he was in receipt of Ontario Works and to serve
    any medical evidence he had to support his claim that he was unable to work due
    to depression by January 20, 2017.

[27]

On January 25, 2017, the husband delivered a
    financial statement sworn the same day. Although the first page of the document
    referred to it as accurate as of March 4, 2008, page two of the document
    indicates it addresses income from January 1, 2016 to December 31, 2016. On January
    26, 2017, the husband delivered his net family property statement. Although these
    documents refer to various "Tab[s]", neither appends a document
    brief.

The motion judges reasons

[28]

In his reasons for striking the husbands
    pleadings, the motion judge noted that the continuing record consisted of 12
    volumes and disclosed that 16 judges had been involved in the case. He observed
    that the wifes affidavit set out many examples of the husbands effort to
    stand in the way of the progress of the application and act to the disadvantage
    of the wife. Further, he noted breaches of four orders and stated the
    following:

1. The September 12, 2016 order :

a) No Financial Statement in 5 years. Order
    of  September 12, 2016 to file within 30 days. Not filed. Result, trial
    adjourned.

b) No Net Family Property Statement with a
    document brief. In breach of September 12, 2016 order .

c) By September 12, 2016, not file personal
    tax returns from 2010 to 2015.

d) No statement of gross earnings from all
    sources in 2016. Breach of [September 12, 2016] order .

2. January 30, 2014 order  at a settlement
    conference undertaking to set out attempts to find employment. Nothing provided
    despite his representation to a Michigan court of criminal jurisdiction that he
    assisted with his mothers farm.

3. August 25, 2011, [the motion judge] ordered
    answers to his undertakings. Some still outstanding.

4. Breach of [the motion judges] August 30,
    2012 order to produce a life policy.

[29]

The motion judge concluded his reasons as
    follows:

[Counsel for the wife] has tried a number of
    times to move this matter onto a trial list but the lack of financial
    disclosure has stood in his way to end this litigation.

This case is now at the 9 year mark. This is
    about 7 years too long.

The administration of justice must not suffer,
    beyond this date, further delay. In fairness to [the wife], she should be able
    to move ahead to finalize what is left to be done and without [the husband] continuing
    to stand in her way. His pleadings are struck. This case is one of those cases
    which requires this exceptional response to the behaviour of [the husband].

Discussion

[30]

As we have said, in our view, the
    husbands appeal from that part of the February 2017 order striking his pleadings
    must be allowed for three reasons.

[31]

First, the transcript of the
    motion heard on February 1, 2017 demonstrates the appellant was denied the
    opportunity to respond fully to the wifes motion to strike.

[32]

The early part of the motion
    hearing was devoted to sorting out what motions were before the court and what
    the record would be for purposes of the motion hearing. The motion judge made
    two rulings related to these issues. In ruling one, he denied the husband the
    opportunity to call oral evidence from his accountant. In ruling two, he struck
    the appellants reply factum based largely on the wifes counsels stated
    objections to it. Both of these rulings adversely affected the husbands
    ability to respond to the wifes motion to strike, and both rulings are
    problematic.

[33]

Ruling one adversely affected the
    appellants ability to respond to the motion to strike because the appellants
    accountant was being called to explain his concerns about the reconciliation of
    trust funds held by the wifes counsel and the difficulties it created in
    preparing income tax returns. Although this evidence related primarily to the
    husbands motion for an accounting and other relief related to the farm
    proceeds of sale held in trust, it was also relevant to the motion to strike.

[34]

It is not clear from his reasons
    that the motion judge appreciated the husbands position that the income tax
    returns, which had been ordered produced within 30 days of the September 2016
    disclosure order, had not been finalized within that period because of
    questions raised by the husbands accountant about reconciliation of the trust
    funds held by the wifes counsel. These questions later resulted in the wifes
    counsel asserting that an error had been made in the distribution of trust
    funds. As we have said, on appeal, both counsel agreed that, in fact, no error
    was made. Nonetheless, it is apparent that, as of October 2016, confusion
    existed over how the trust funds had been distributed.

[35]

Ruling one is problematic because
    the motion judge focused on the terms of the formal December 2016 order, which
    required that a letter outlining the husbands evidence be sent to the wifes
    counsel. The transcript reveals that the motion judge never grasped, or even
    entertained, the husbands point that the handwritten endorsement did not say
    the letter should be sent to the wifes counsel  or the husbands position
    that he had filed the necessary letter with the trial coordinator. Had the
    motion judge grasped the husbands position, it may well have been possible to
    receive the accountants evidence by affording the wifes experienced counsel
    an opportunity to review the accountants letter that the appellant asserted he
    had filed.

[36]

Ruling two adversely affected the
    husbands position on the motion to strike because, after the ruling to strike his
    reply factum was made, the husband asserted that, among other things, it
    contained answers to undertakings and document briefs
[4]
.
    The wifes counsel objected to the reply factum because neither the
Family
    Law Rules
, O. Reg. 114/99, nor the
Rules
    of Civil Procedure
, R.R.O. 1990, Reg. 194,
    provide for a reply factum; because it was delivered on January 30, 2017, only
    two days before the motion hearing; and because it contained evidence that was not
    under oath.

[37]

Ruling two is problematic because
    there is no indication the motion judge turned his mind to whether the reply
    factum contained any material that could properly be considered on any of the
    motions before the court for the husbands benefit  such as answers to
    undertakings, responses to outstanding orders for disclosure, or documents that
    related to the husbands net family property or financial statements.

[38]

Although the
Family Law
    Rules
and the
Rules of Civil
    Procedure
are designed, at least in part,
    to ensure procedural orderliness and efficiency, they are not so rigid or
    inflexible as to preclude the court from examining non-compliant documents
    submitted by self-represented litigants to ensure that any properly admissible
    portions are received.

[39]

A key issue on the motion to
    strike was the husbands state of compliance as of the date of the motion
    hearing. Contrary to the subsequent submissions of the wifes counsel, if the
    husband delivered documents in advance of the motion hearing to comply with
    outstanding undertakings or court orders, he should not have been precluded
    from demonstrating compliance because he did not file an affidavit in response
    to the motion to strike. If the documents or responses were included in his
    reply factum, that demonstrated pre-hearing compliance.

[40]

The husband did not file fresh
    evidence on appeal. We do not, therefore, know whether he filed a letter from
    his accountant with the court office or what additional information his reply
    factum contained. What we do know is that he did not have the opportunity to
    convey fully his position on these issues to the motion judge.

[41]

Second, although the motion judge relied
    on a finding that the wifes counsel had tried a number of times to move this
    matter onto a trial list but the lack of financial disclosure [had] stood in
    his way to end this litigation, that is not an accurate characterization of
    how the case progressed.

[42]

The record reveals that the wifes
    counsel agreed to adjourn the trial from the September 2015 trial list, albeit
    because the husband was not available to attend. The matter next came up for
    trial in September 2016. The wife did not move for disclosure until the
    sittings were underway. Issues over reconciliation of the trust funds held by
    the wifes counsel contributed to delay in completing the disclosure, and the
    November 7, 2016 trial date was vacated on consent.

[43]

In the result, the record does not,
    in fact, reveal a consistent effort by the wifes counsel to pursue outstanding
    disclosure or to get this matter on for trial.

[44]

Third, in the context of not
    having a full picture of the husbands position on the motion to strike,
the motion judge failed to properly
    consider whether any lesser remedy would suffice.

[45]

It is a well-established
    principle that in a family law case, pleadings should be struck only in
    exceptional circumstances, and where no other remedy would suffice:
Kovachis
    v. Kovachis
,
2013 ONCA 663, 311
    O.A.C. 228, at para. 2. At the same time,
the most basic obligation in family law is the
    duty to disclose financial information. This requirement is immediate and
    ongoing and should not require court orders:
Roberts v. Roberts
, 2015 ONCA 450, 65
    R.F.L. (7th) 6, at paras. 11-13. Nonetheless, before striking pleadings, a
    court should consider not only the availability of any alternate remedy, but
    also the importance and materiality of any items not produced:

Kovachis
, at para. 34.

[46]

Here, the motion judge could not
    properly carry out that function. He did not allow the husband to file his
    reply factum so that he (the motion judge) could assess to what extent it
    provided additional compliance with outstanding undertakings or court orders. And
    he did not explore whether the husbands accountant could be permitted to
    testify on terms that were fair to the wifes counsel.

[47]

In this case, the
    husband has a strong incentive to make proper disclosure before this case
    proceeds to trial.
He takes the position
    that his preferred share in the farm corporation (arising from his prior
    ownership of the farm) makes the common shares that he and the wife hold
    essentially worthless. He also takes the position that the interim support
    being charged to his share of the farm proceeds is too high because it is based
    on an inflated imputed income. However, he cannot expect to advance these
    positions at trial if he does not make full and fair documentary disclosure
    about his assets, income, and ability to work (including full particulars of
    any attempts at retraining or finding work).

[48]

Based on our review of
    the existing record, by the time of the motion, the wife had disclosure of the
    husband's personal and corporate income tax returns for years exceeding those
    required under the September 2016 disclosure order, as well as at least draft
    corporate financial statements. The husband had also delivered a financial
    statement purporting to set out his income for 2016, as well as a net family
    property statement.

[49]

Although the husbands
    financial statement lacked particulars (including the sources of his income and
    the amount of income from each source) and although his net family property
    statement did not include a document brief, a specific order could have been
    made requiring the husband to produce specific documents related to his income.
    Similarly, it was not made clear in any of the September 2016 disclosure order,
    the motion judges reasons, or the material filed before us what documents the
    husband was to include in the document brief to be delivered with the husbands
    net family property statement. We note that in her October 2016 correspondence,
    the husbands counsel purported to forward to the wifes counsel documents
    related to date of marriage values for his property. If the husband was
    required to produce any documents other than those described in particular
    rules, the required documents ought to have been specified.

[50]

And, as we have said, the motion
    judge should have reviewed the husbands reply factum and explored letting his
    accountant testify, so that he would have had a full picture of the disclosure
    that had been made as of the date of the motion.  In failing to do so, he
    erred.

Disposition

[51]

Based on the foregoing reasons, we
    would allow the appeal and make the following orders:

i)

Para. 2 of the February 2017 order is set aside on consent;

ii)

Para. 3 of the February 2017 order is set aside and the following orders
    are substituted:

3(a) If not already provided, within 30 days of the release of
    this decision, the husband shall provide the following to the wifes counsel:

A.

A
    statement of his gross earnings from all sources in 2017, specifying the name
    and address of each income source, the amount of gross income received from
    that income source, and copies of any documents in his possession that support
    any amounts of income received from each income source during 2017;

B.

A signed direction addressed to each income source listed under item A,
    directing the income source to provide written confirmation to the wifes
    counsel of the particulars of the husbands year-to-date gross income received
    from that source;

C.

An up-dated sworn financial statement;

D.

Copies of any documents in his possession relevant to his net family
    property statement that are requested by the wifes counsel within 15 days
    following the release of this decision;

E.

Copies of any medical reports that support his claim that he is unable to
    work;

F.

Details of any efforts to find employment or retrain, including the full
    name, address, and telephone number of any prospective employers/trainers; the
    dates on which they were approached; the nature of the information they were
    provided, for example, job application, C.V. etc., and copies of same if
    available;

3(b) If the husband fails to substantially comply with any
    aspect of para. 3(a) without a reasonable explanation, the wife may move for an
    order striking the husbands pleadings;

3(c) Subject to the discretion of the trial judge, the husband
    shall be precluded from introducing into evidence at trial any documents or
    other evidence that he has not provided to the wifes counsel at least seven
    days before trial; and

3(d) Despite this order, the wife may request that a trial date
    be set forthwith, peremptory on the husband, but allowing sufficient time for
    the husband to comply with the terms of this order.

[52]

The costs order
    made below is also set aside. There shall be no order as to costs of the appeal
    or the proceeding below.

Janet Simmons
    J.A.

E.A. Cronk
    J.A.

David M.
    Paciocco J.A.





[1]
Under an order dated November 12, 2010, the husband was ordered to pay the wife
$770.00 per month for spousal support and $1448.00 per month for
    child support, based on an imputed annual income of $76,000 per year.



[2]

The December 22, 2016 oral ruling also referred to the letter
    being provide[d] or file[d].



[3]

It is unclear from the appeal record who prepared the typed transcription
    that is included in the record.



[4]

At the motion hearing, the wifes counsel relied on the fact
    that the reply factum contained exhibits and copious material in support of
    his motion to strike the reply factum.


