Recently the Ontario Court of Appeal confirmed a lower court ruling that did something drastic – it struck out a husband’s pleadings entirely, and allowed the wife to continue in the Family law proceedings on an entirely uncontested basis. This remedy is reserved for what the law considers to be “exceptional” cases; the Court confirmed that the husband’s persistent bad faith in the proceedings so far amply warranted such a response.
By way of background: The husband and wife were married in 1992. In 2011 they signed a separation agreement in which the wife waived all rights to support and equalization, and gave up all interest in the corporate enterprises, accounts, investments, and valuable automobiles the wealthy husband owned. However, she gave evidence that the wife had misled her and coerced her into signing this document.
The couple apparently reconciled and continued to live together for a few years. But in 2015, the husband asked the wife to leave their jointly-owned home, which she did. Even though it was worth over $4 million, he allegedly threatened and coerced her to transfer her interest to him for $1 – but still insisted she remain liable on the $1,600,000 indebtedness secured against it. All this despite the wife’s annual income being only about $20,000.
The parties then commenced divorce proceedings. In its ruling the Court of Appeal cut to the heart of the husband’s rampant misbehavior throughout this process:
[5] The history of the [husband’s] delay, disregard of court orders, and non-disclosure was described in considerable detail by the motion judge with hearings numbering at least 27. The motion judge stated at para. 16 of his reasons:
To suggest this is a typical family dispute, or even a high conflict dispute, is a serious understatement. The Applicant [wife] diligently sought to prosecute her financial claims but has been met with a serious, persistent, deliberate and flagrant response from the Respondent [husband] in this proceeding. The Respondent ignored his obligation to make full and accurate financial disclosure and disregarded numerous court orders. The Respondent’s conduct amounts to bad faith rising to the level of fraudulent misconduct. The Respondent engaged the assistance of [two friends], who then also engaged in misconduct and ignoring court orders. All of this was done by the Respondent, with the assistance of [his friends], for the sole purpose to avoid and defeat the Applicant’s financial claims to equalization and spousal support of family assets. By all accounts, the Respondent is a wealthy person who chose to engage in misconduct and ignored court orders, risking that his pleadings would be struck, rather than defending the Applicant’s financial claims on the merits. All to protect his financial wealth and not risk losing any of it to the Applicant in this proceeding.
The Court also chronicled the husband’s litany of bad faith conduct that showed his deliberate disregard for court orders and procedure throughout the process. Among other things:
- He failed to pay any of the amounts he was ordered to pay the wife, aside from some very modest support payments.
- He sought many adjournments, or else caused them failing to attend at scheduled court hearings, which seriously prejudiced the wife.
- He repeatedly ignored court orders to make financial disclosure.
- He moved some of his assets around, where they could not be found or disclosed to the wife.
- When one of his requests for an adjournment was denied, he “essentially emptied his bank accounts”.
- He arranged to have two of his friends, putative mortgagees on the matrimonial home, sell it under power of sale proceedings – unbeknownst to the wife. He then took payment of the proceeds in full, despite being in breach of yet another order to pay $1.6 million into court.
All of this led to the prior motion judge striking out the husband’s pleadings (though not before giving him one last chance to comply, which he ignored).
The present appeal by the husband – who did not bother to appear – was dismissed. The Appeal Court wrote:
Delay and obfuscation of his financial affairs was the [husband’s] “game plan” throughout. It remains his game plan.
The circumstances in this case are exceptional. They are one of the worst, if not the worst circumstances, in any of the authorities referred to by Counsel. Comparisons with other circumstances in the authorities is futile.
The only reasonable remedy, the Appeal Court agreed, was to strike the husband’s pleadings entirely, and allow the wife to proceed with an uncontested trial. No further notice had to be given to the husband going forward.
While acknowledging this sanction was typically an “instrument of last resort”, the Court rejected the notion that a lesser one should be imposed. Nothing had worked on the husband in the past, and there was nothing to suggestion he would suddenly cooperate in the future.
For the full text of the decision, see:
Manjunath v. Kuppa, 2024 ONCA 668 (CanLII), <https://canlii.ca/t/k6nhn
