Johanns v. Fulford, 2011 ONCJ 781

Toronto: Registry No. DFO 06 11158 B2 DATE: 2011·XII·23 CITATION: Johanns v. Fulford , 2011 ONCJ 781 ONTARIO COURT OF JUSTICE BETWEEN: DAVID JOHANNS Applicant (ON MOTION) — AND — SUSAN FULFORD Respondent Before Justice Penny J. Jones RULING on motion released on 23 December 2011 David Johanns .................................................................................................... on his own behalf Anita A. Volikis .................................................................................. counsel for the respondent [ 1 ] JUSTICE P.J.

JONES:— This is my ruling on a motion brought by the respondent, Susan Fulford (Ms. Fulford) , for an order dismissing the applicant’s (Mr. Johanns) motion to change under subrules 1(8) and 14(23) of the Family Law Rules , O. Reg. 114/99, as amended. [ 2 ] His motion to change relates to the expenses under

section 7 of the Child Support Guidelines , O. Reg. 391/97, as amended, set out in the consent order of Madam Justice Ellen B. Murray dated December 14, 2009. It is his position that the day-care expenses, which are the only

section 7 expenses enumerated in the order, should be adjusted as of September 2010 when the respondent mother placed Harrison in a less expensive day care. [ 3 ] Counsel for Ms. Fulford argued that Mr. Johanns’ application to retroactively vary the specified child care expense prior to the date specified in the order, namely, September 2011, is without merit and the first date such expense could be adjusted, on the clear wording of the order, is September 2011. [ 4 ] In this regard, she indicated that she had made a time-limited proposal to vary the

section 7 expense effective September 2011, but her offer had not been taken up. At the request of the court, she agreed to extend her offer, subject to arguing costs. Mr. Johanns indicated that he would discuss the matter with counsel. [ 5 ] She further argued that not only did his motion to vary lack merit, Mr. Johanns, in the circumstances of this case, should not be given audience because of his failure to obey court orders previously made in this proceeding. She urged me to dismiss Mr. Johanns’ motion to vary with costs due to his non compliance with court orders. She referred to the following rules. [ 6 ] Subrules 1(8) and 14(23) read as follows: 1.—

(8) Failure to follow rules or obey order.— The court may deal with a failure to follow these rules, or a failure to obey an order in the case or a related case, by making any order that it considers necessary for a just determination of the matter, on any conditions that the court considers appropriate, including, (

a) an order for costs; (

b) an order dismissing a claim made by a party who has wilfully failed to follow the rules or obey the order. . . . 14.—

(23) Failure to obey order made on motion.— A party who does not obey an order that was made on motion is not entitled to any further order from the court unless the court orders that this subrule does not apply, and the court may on motion, in addition to any other remedy allowed under these rules, (

a) dismiss the party’s case or strike out the party’s answer or any other document filed by the party; (

b) postpone the trial or any other step in the case;

(

c) make any other order that is appropriate, including an order for costs. 1: POSITION OF THE PARTIES 1.1: Ms. Fulford [ 7 ] Counsel for Ms. Fulford argued that the Mr. Johanns’ motion to change should be dismissed because he has failed to obey three orders of the court, namely, 1. That he has failed to pay child support agreed to in a consent judgment, and is currently in arrears in an amount in excess of $10,000. 2. That he has failed to pay any amount towards the substantial cost awards made in favour of Ms. Fulford.

The original application, hotly contested for three years, was resolved on consent on the day of trial. The trial judge awarded $65,000.00 in costs to Ms. Fulford. A further $4,000.00 in costs remains outstanding relating to Mr. Johanns’ unsuccessful leave motion to appeal this cost award. 3. Although he has apparently secured an insurance policy, he has failed to provide an insurance policy with the beneficiary designated in accordance with the consent order, namely, the policy he has secured does not have Ms.

Fulford designated as irrevocable beneficiary in trust for Harrison. [ 8 ] It is her position that this matter has been in litigation, without break, since 2006, and Ms. Fulford, who is represented, is being forced to incur substantial legal costs to defend herself. She argued that, if I were to permit Mr. Johanns to continue to initiate litigation, while he disregards his obligation to pay cost awards and fails to be in compliance with his support orders, such a decision would not only be unfair to Ms. Fulford, but it would sends a message to Mr.

Johanns that there are no consequences for non-compliance with court orders and that he can continue to litigate with impunity. 1.2: Mr. Johanns [ 9 ] Mr. Johanns is self represented and, on occasion, it was difficult to follow his argument with precision. [ 10 ] If I understand his argument correctly, it is his position that a proper reading of the order of Madam Justice Murray relating to

section 7 expenses entitles him to a retroactive reduction in the amount of

section 7 expenses actually owing from at least September 2010, which would result in a reduction in his arrears calculated by the FRO. [ 11 ] In support of his argument, he referred to the terms of the child support order.

He argued that I should read paragraph 3 and paragraph 5 of the order and should reach the conclusion that he should pay 50% of the after-cost day-care expenses and, as the cost of day care decreased in September 2010, he is entitled to a decrease in the arrears owing. [ 12 ] As there is dispute as to how the support provisions interact, I have included all the support provisions in my endorsement for ease of reference: 1.

The parties shall not seek re-payment of any underpayment or overpayment of child support, pursuant to the order of Justice Paulseth, dated February 13, 2009, up to and including December 31, 2009, except that on or before December 15, 2009, the Applicant shall pay to the Respondent $1,900.00, to be reduced by the amount paid by the Applicant to FRO for the December payment of child support which the Applicant advises is $1,300.00. 2. Commencing on January 1, 2010, the Applicant shall pay to the Respondent $557.00 a month in table child support, pursuant to

section 3 of the Child Support Guidelines (“the Guidelines”), for one child based on the Applicant’s agreed annual income of $60,000.00. 3. Commencing on January 1, 2010, the Applicant shall contribute $550.00 a month to the Respondent’s after tax cost of day-care expenses for the child Harrison James Fulford, born July 22, 2006. The total daycare costs are anticipated to be $14,200.00. The Respondent shall pay the balance of the daycare costs notwithstanding that the costs may be greater than the proportionate share that would otherwise be required under the Guidelines . 4. The Applicant’s

section 3 child support obligation shall not be reviewed until June 1, 2015. 5. The Applicant’s

section 7 child support obligation shall be adjusted September1, 2011, when the child, Harrison James Fulford born July 22, 2006 enters kindergarten and the parties shall each pay 50% of the after tax daycare costs until the June 1, 2015 review. 6. The Applicant and Respondent shall comply with

section 21 of the Guidelines on or before June 1st of each year, commencing June1, 2015. 7. The Respondent shall obtain the Applicant’s advance consent to any additional section7 expense for Harrison James Fulford. 8. The Applicant shall obtain and maintain a policy of insurance on his life with a face value of not less than $500,000.00 to secure his child support obligation for Harrison James Fulford and shall designate the Respondent as the irrevocable beneficiary in trust for Harrison James Fulford for so long as the Applicant is obligated to pay child support for their son to the Respondent.

Proof of the insurance will be provided within 30 days of the date of December 11, 2009. [ 13 ] Mr. Johanns seeks a reduction in the monies owing to Ms. Fulford. Even if he is correct in his

interpretation of the order

[13] Mr. Johanns seeks a reduction in the monies owing to Ms. Fulford. Even if he is correct in his

interpretation of the orderand a recalculation of

section 7 expenses is available as of September 2010, the deduction from the sum owing to Ms. Fulford(approximately $79,000.00 plus costs) would be at best $2-3,000.00. I note that Ms. Fulford swore in an affidavit filed in this proceedingthat she actually paid $12,277.00 in child care expenses in 2010, and she agrees that she did change day care providers in September2010. The total child care costs for 2011 are only now ascertainable. Both parties agree that, as of September 2011, child care expensesmay be varied according to

section 5 of the order, and as such that leaves only eight months in 2011 in contention. [14] Mr. Johanns claims that he has paid what he owes to the best of his financial ability and is in compliance with a consentrefraining order of $800.00 per month made May 11. 2011.

He argues that he should be allowed to proceed notwithstanding that he hasnot paid his cost awards and has not complied in full with his support order because he does not have the ability to pay. [15] As to the wording in the insurance policy as to the beneficiary of the policy, he argued that his insurance carrier refused toword the designation as outlined in the order. He indicated that he has secured a policy with a face value of $500,000.00 whichdesignates the child as the beneficiary with Ms.

Fulford as trustee and is therefore in substantial compliance. 2: DISCUSSION [16] The parties to this proceeding have been in litigation, in one form or another, since 2006. [17] Although it is a serious matter to dismiss Mr. Johanns’ motion to change as requested by Ms. Fulford for failure to obey acourt order(

s) and thereby not allow the matter to be decided on its merits, in appropriate circumstances, the court is not only authorizedto do so but is instructed to do so under rules. In circumstances in which a court finds that a litigant has disobeyed a court order, the onusis on the individual who has breached the order to show, on the balance of probabilities, that subrule 14(23) is not applicable. The caselaw is clear that costs are captured by this subrule, and that it would take an extraordinary event to trigger the “unless” provision ofsubrule 14(23). See Gordon v. Starr, , 42 R.F.L. (6th) 366, [2007] O.J.

No. 3264, 2007 Cars​well​Ont 5438 (Ont. Fam.Ct.), at paragraph [15]; Ferguson v. Charlton, 2008 ONCJ 1, 171 A.C.W.S. (3d) 910, [2008] O.J. No. 486, 2008 Cars​well​Ont 667 (Ont.C.J.), at paragraph [59]; Molina v. Molina, 2011 ONSC 3030, [2011] O.J. No. 2287, 2011 Cars​well​Ont 3569 (Ont. Fam. Ct.), atparagraph [5]; Oxley v. Oxley, 2010 ONSC 1609, 85 R.F.L. (6th) 435, [2010] O.J. No. 1355, 2010 Cars​well​Ont 1987 (Ont. Fam. Ct.), atparagraph [15]. [18] In deciding whether to dismiss the motion to change, I have adopted the approach taken by Justice Robert J. Spence inFerguson v. Charlton, supra.

In paragraph [64], he wrote: [64] As may be apparent from the foregoing, I have approached the non-compliance issue byfollowing a three step process: • First, the court must ask whether there a triggering event that would allow it to consider thewording of either subrule 1(8) or subrule 14(23).

That triggering event would be non-compliance with a court order “in the case or a related case” [subrule 1(8)] or an order “madeon motion” [subrule 14(23)]. • Second, if the triggering event exists, the court should then ask whether it is appropriate toexercise its discretion in favour of the non-complying party by not sanctioning that party undersubrule 1(8), or by ordering that subrule 14(23) does not apply. My review of the foregoingcase law suggests that this discretion will only be granted in exceptional circumstances.

In myview, the court’s decision whether or not to exercise its discretion in favour of a non-complyingparty, ought to take into account all relevant history in the course of the litigation and, morespecifically, the conduct of the non-complying party. • Third, in the event that the court determines that it will not exercise its discretion in favour ofthe non-complying party, it is then left with a very broad discretion as to the appropriate remedypursuant to the provisions of either subrule 1(8) or subrule 14(23). [19] In this case, I am satisfied that there has been a failure to obey a court order and accordingly there has been a triggeringevent that would allow the court to consider the wording of subrule 1(8) and subrule 14(23).

Mr. Johanns argues that his failure to paycosts and fully comply with the child support order relates to his ability to pay. This issue was raised throughout the initial proceedingswhich resulted in a consent order with an agreed annual income for him of $60,000.00. He continues to be a self-employed musician,film composer residing in a home owned by his father. There appears to be no material change in this regard. [20] This is not the time to re-litigate his ability to pay. Case law would suggest that ability to pay the costs order is not arelevant consideration. In Gordon v.

Starr, supra, at paragraph [19], Justice Joseph W. Quinn wrote: [19] . . . When I made that order, I did not attach any provisos, conditions or exceptions. I did notsay, for example, that Gordon need comply with the May costs order only if she felt like it or if it wasfinancially convenient for her to do so. If the ability to pay costs is ever relevant, it is upon the makingof the order, not when compliance is in issue. [21] In deciding whether to exercise my discretion and permit Mr.

Johanns to continue with his action notwithstanding hisdisobedience of a court order, I have considered the relevant history of the litigation and the conduct of Mr. Johanns. [22] I have reviewed the material filed. As well, as the case management judge on this file, I am aware of the history of thismatter. I note: • That there were many court attendances, case conferences and a number of motions before this matter was set for trial. Determining Mr. Johanns’ ability to pay was a significant issue given his self-employed status.

• This case settled at the courtroom door. Madam Justice Murray, as the trial judge, assessed costs against Mr. Johanns in the amount of $65,000.00 ($32,500.00 of which is enforceable as child support). • Mr. Johanns appealed this cost order.

Apparently, his leave motion was dismissed in 2011 with costs fixed at $4,000.00 ($2,000 of which is enforceable as child support). • In May of 2011, when threatened with the loss of his licence, he brought a refraining motion, and a refraining order was made ordering him to pay $800.00 per month, which is currently in good standing. • A refraining order must be part of a motion to change, and in May, 2011, Mr. Johanns commenced this motion to change. • The motion to change is restricted to a motion to adjust

section 7 expenses from September 2010. Mr. Johanns is self- represented and Ms. Fulford is represented by counsel. In order to defend the action, Ms. Fulford has prepared pleading, a case book and factum and has attended court on two occasions, the second appearance resulting in an argued motion. [ 23 ] Mr. Johanns has continued to litigate this matter long after the time it makes any economic sense to litigate. In any cost- benefit analysis, any benefit that he might possibly secure (at best, small) in winning the motion, would make no appreciable difference in the amount he owes Ms.

Fulford, and is far outweighed by the cost of continued litigation to Ms. Fulford and the potential cost consequences in the event he is unsuccessful. [ 24 ] As to the apparent merits of his motion to change, on a plain reading of the consent entered into before Madam Justice Murray, it appears that the parties were agreeing to call a pause in the litigation; they were apparently agreeing to delay revisiting child guideline support until 2015; and until 2011 for

section 7 expenses no doubt because of the destructive and protracted course of the litigation to the date of the consent. [ 25 ] Mr. Johanns’ attempt to relitigate

section 7 expenses has caused Ms. Fulford to incur more costs at a time he is in default of two prior cost orders in the amount of $69,000.00. It seems evident to me that his motion to change, even if he were successful, would produce only a negligible change to the substantial sums of money that he currently owes to Ms. Fulford. Given the history of this proceeding, and the behaviour of Mr. Johanns in starting an action that has no apparent merit (and would, even if successful, result in an almost inappreciable difference to the money owed to Ms Fulton), I have decided not to exercise my discretion under subrules 1(8) and 14(23) to allow him to seek an order reducing retroactively his

section 7 expense obligation. [ 26 ] As Justice Quinn noted in Gordon v. Starr , supra , at paragraph [23] : [23] . . . Court orders are not made as a form of judicial exercise. An order is an order, not a suggestion. Non-compliance must have consequences. One of the reasons that many family proceedings degenerate into an expensive merry-go-round ride is the all-too-common casual approach to compliance with court orders. [ 27 ] I have considered the sanction options available to me and I am satisfied that the most appropriate remedy at this time is to dismiss this motion to change with costs.

As to the change contemplated in the consent order in September 2011, I would suggest, as I did in court after the motion was argued, that Mr. Johanns seek further legal advice with a view to entering into a negotiated settlement. The issue to be decided on an ongoing basis is not complicated and may be determined by a mathematical formula. I note in the past that Mr. Johanns has had the benefit of legal advice and I urge him to seek such advice in this regard. It is clear to me from reading his material that he does not understand how these calculations are made.

In his material filed, he included a copy of a letter that he sent to the FRO in which he said in part: As of September 1, 2010 Harrison is attending a new day care. I have included the school form as proof of costs. I have also included the court order which addresses daycare costs and ask you note paragraph 3 and 5. The annual after tax daycare cost is $693 over 10 months is $6930. Tax return/benefit to mother is $7,000. Annual daycare cost is now zero. 3: COSTS [ 28 ] Costs shall be determined on the written submissions of the parties. Counsel for Ms.

Fulford shall have 20 days to serve and file a bill of costs, with case law as to quantum, if so advised. Mr. Johanns shall have 20 days to serve and file a response. Ms. Fulford shall have a further 15 days to serve and file a reply. Released on : 23 December 2011 ________________________________ Signed: Justice Penny J. Jones