Elbadawy v. Moustafa, 2023 ONSC 6024

In a recent decision released on October 25, 2023, the Superior Court of Justice reiterated the importance and mandatory nature of financial disclosure in family law matters.

In this case, the applicant father brought a motion to strike the respondent mother’s Answer under Rule 1(8) of the Family Law Rules, alleging that she was in breach of two disclosure orders and two cost orders. The respondent filed no materials and did not appear at the hearing.

The applicant and respondent were married in Egypt in 2006 and moved to Canada in 2012. They separated on March 9, 2021. The respondent was a dentist who practiced through her own clinic and the applicant, though a trained pharmacist, managed the dental clinic during the marriage. After separation, he resumed working as a pharmacist in Northern Ontario and then returned to Ottawa, where they lived.

There had been many difficulties with disclosure between the parties. On October 14, 2021, the parties were ordered to make all reasonable efforts to exchange the necessary disclosure ahead of the next appearance. Though, in December 2021, disclosure was still in dispute. On August 30, 2022, an automatic order under Rule 8.0.1 of the Family Law Rules was made.  A further order was made on February 27,2023 which stated that the respondent had not yet provided “the most basic disclosure” in relation to the support and property claims that involved significant business assets and real estate. The respondent had 30 days to comply, and if she did not do so, she was given an additional 30 days to explain in writing why and when she would be able to comply. The applicant was awarded $800.00 in costs. At the subsequent hearing, the applicant submitted that neither disclosure nor the written explanation for its non-production had been given, and that the costs remained unpaid.

Rule 1(8) provides the court with discretion to make any order it considers necessary to arrive at a just determination where an order has not been obeyed. The court followed the framework set out in Mullin v. Sherlock, 2018 ONCA 1063 for decisions under Rule 1(8). First, before granting a remedy for failure to obey a disclosure order, the court must be satisfied that there has been non-compliance with the order. Second, a judge may consider alternative recourse to what is set out in Rule 1(8). In determining the most appropriate remedy, a judge should consider:

• The relevance of the non-disclosure (including its significance in hindering the resolution of the issues in dispute);
• The context and complexity of the issues in dispute (an uncomplicated case should have little tolerance for non-disclosure whereas a more complex case involving an extensive evaluation of assets may allow for some reasonable delay in response);
• The extensiveness of existing disclosure;
• The seriousness of efforts made to disclose and the explanation offered by a defaulting party for the insufficient or lack of disclosure; and
• Any other relevant factors

In considering these factors, the court found that the respondent’s failure to comply with the orders related to financial disclosure was willful and that fulsome financial disclosure is necessary for resolving financial issues such as support and property claims. Without disclosure, neither of these issues could be adequately resolved. The respondent also had more than sufficient time to produce the necessary records, as the proceeding commenced over two years prior.

In determining the appropriate remedy, the court held that these circumstances were exceptional, as the respondent appeared to have turned her back on her obligation to contribute to the support of the couple’s four children. Prior to separation, she had been the primary earner for the family, and upon separation, she left the applicant to deal with significant debt from the dental practice. The respondent had also previously been ordered to pay costs, which she did not do. Consequently, an order was granted to strike the respondents pleadings. The applicant was permitted to proceed with an uncontested trial and was awarded costs.

Written by Tim Gronfors and Olivia Duguay