Bennie v. Tersigni, 2011 ONCJ 626

COURT FILE No.: Toronto Region DFO 09 10658 DATE: 2011·03·14 CITATION: Bennie v. Tersigni , 2011 ONCJ 626 ONTARIO COURT OF JUSTICE BETWEEN: LEONARD BENNIE Applicant — AND — LORI TERSIGNI Respondent Before Justice Ellen B. Murray Heard on March 14, 2011 Reasons for Decision released March 22, 2011 Ms. Heather Hansen & Mr. Eric Sadvari ............................................................ for the applicant(

s) Mr. Brian Ludmer .......................................................................................... for the respondent(

s) MURRAY, E. B. J.: [ 1 ] Lori Tersigni brings a motion requesting disclosure from ten financial institutions of records they may have of accounts belonging to her former husband, Leonard Bennie. She asks for records going back seven years. She says she takes this step because disclosure furnished by Mr. Bennie is inadequate and misleading. The full text of the motion is set out in Appendix A to this decision. [ 2 ] Mr. Bennie opposes the motion. [ 3 ] Ms. Tersigni’s motion is brought in the context of a motion brought by Mr.

Bennie asking that the child support provisions of the separation agreement between the parties dated December 17, 1999 be changed, to reduce the support owing. That proceeding commenced in August 2009. The major factor Mr. Bennie advanced in requesting the reduction was an alleged decrease in income. Ms. Tersigni, responding, opposed Mr. Bennie’s request to change, and asked that his obligation to pay special expenses be quantified retroactively. She alleged that Mr.

Bennie was in arrears of those expenses by an amount of $140,000, and that the quantification was necessary so that she could take steps to enforce the payments. History of the case [ 4 ] Mr. Bennie works as a commercial real estate agent. Ms. Tersigni questioned from the outset whether his claims with respect to a decrease in income were accurate. [ 5 ] A disclosure order was made February 11, 2010. Some of the contemplated disclosure was provided. Additional disclosure requests were made by Ms. Tersigni’s counsel.

Many of those requests were answered. [ 6 ] On May 3, 2010 the parties agreed to an order setting out a timeline for additional disclosure requests and a response to those requests, and for questioning. [ 7 ] Questioning of Mr. Bennie took place in June 2010 and was adjourned, pending receipt by Ms. Tersigni’s counsel of certain disclosure. Undertakings were given in the questioning. Many of those undertakings were answered. [ 8 ] On August 23, 2011, the parties settled all but one of the issues in the proceeding. They consented to a final order dealing with future support. Mr.

Bennie was to pay support for the 2 children of the marriage based on an imputed annual income of $99,700 [1] , with a step-down in the amount when one child ceased to be eligible for support. The consent order provided for payment of a table amount and for payment of future special expenses. The order provided that the child support was non-variable, despite any change in circumstances, no matter the magnitude of the change, whether foreseeable or not.

[9] The issue that remains concerns expenses paid by Ms. Tersigni in the past, alleged to be special expenses owed to herowing under the agreement. The arrears alleged go back eight years. [10] Mr. Bennie’s lawyer candidly concedes that he will owe some amount with respect to past special expenses, although thatamount is hotly debated. [11] However, she says that this claim should be viewed as a claim for retroactive support, not simply arrears of support, andthat the analysis set out in D.B.S. v. S.R.G., (2006)2006 SCC 37 , 2 S.C.R. 231 should be applied. Mr.

Bennie asserts that aretroactive payment would cause him hardship. Mr. Bennie also questions whether certain expenses claimed were contemplated by theagreement, and whether his consent was given for certain expenses incurred. [12] Whether the case concerns arrears of special expenses or a retroactive claim for these expenses, Mr. Bennie’s income andresources will be relevant factors in assessing his ability to pay any amount that might be ordered.

Rule 19(11) Third party disclosure is governed by Rule 19(11) of the Family Law Rules: If a document is in a non-party's control, or is available only to the non-party, and is not protected by a legal privilege, and it would beunfair to a party to go on with the case without the document, the court may, on motion with notice served on every party and served onthe non-party by special service, • (

a) order the non-party to let the party examine the document and to supply the party with a copy at the legal aid rate; and • (

b) order that a copy be prepared and used for all purposes of the case instead of the original. The parties’ positions [13] Ms. Tersigni’s counsel argues that the wide-ranging disclosure he requests should be ordered because, despite attempts toobtain adequate disclosure from Mr. Bennie over the past 18 months, he has no clear information about Mr. Bennie’s income orresources. Counsel asserts that it would be unfair to compel him to proceed to trial without this information. He submits that Mr.Bennie’s disclosure has been woefully deficient, and in major respects, misleading or inaccurate. He argues that that Mr.

Bennie admitsthat he spends far more than his income but has no plausible explanation of the source of additional monies, and that this factor points tothe existence of undisclosed funds. [14] Mr. Bennie’s counsel characterises the motion as a “fishing expedition”, and argues that it should be dismissed. Shesubmits that: • Mr. Bennie has made ample disclosure, and any deficiencies are insignificant. (She concedes that Mr.

Bennie did neglect to disclosethe statements from his latest personal account for the past nine months, but assures that disclosure will be made shortly.) • Although the documents requested have some relevance to one issue in the case, Ms. Tersigni has not demonstrated that it would be”unfair” for her to proceed to trial without the documents sought. • The disclosure sought is disproportionate to the importance of the issue.

Obtaining and assessing the disclosure requested will entailsubstantial unwarranted time and cost. • The disclosure sought is a disproportionate invasion of her client’s privacy. [15] None of the financial institutions served responded to the motion. Counsel for Ms. Tersigini advised that three banks hadcontacted his office, indicating that the request could be satisfied quickly, given modern computerized records and the precise searchparameters set out in the motion. The facts and analysis [16] The Ontario Court of Appeal in Ontario (Attorney General) v.

Ballard Estate, (1995) (ON CA), 26O.R. (3d) 39 set out factors which should be taken into consideration when ordering disclosure from a third party pursuant to Rule 30.10of the Rules of Civil Procedure: • the importance of the documents in the litigation:

• whether production at the discovery stage of the process as opposed to production at trial is necessary to avoid unfairness to the appellant; • whether the discovery of the defendants with respect to the issues to which the documents are relevant is adequate and if not, whether responsibility for that inadequacy rests with the defendants; • the position of the non-parties with respect to production; • the availability of the documents or their informational equivalent from some other source which is accessible to the moving parties; • the relationship of the non-parties from whom production is sought, to the litigation and the parties to the litigation.

Non-parties who have an interest in the subject-matter of the litigation and whose interests are allied with the party opposing production should be more susceptible to a production order than a true “stranger” to the litigation [ 17 ] Those factors have been utilised by courts in family cases in assessing claims for disclosure from third parties under R. 19(11). In the light of those factors, I have concluded that it would be unfair to require Ms. Tersigni to go to trial without disclosure from the financial institutions that are the respondents to this motion.

I do not agree, however, that seven years of disclosure is required to provide her with information about Mr. Bennie’s current resources. My decision is explained below. Importance of the documents in the litigation [ 18 ] I do not read R. 19(11) as providing that the disclosure sought has to be related to a critical piece of evidence. The disclosure sought has to be relevant to the issues before the court, and sufficiently significant that it would be unfair to deny the requesting litigant access. It is accepted that the extent Mr. Bennie’s current resources will be a relevant issue at trial.

He is asserting that a retroactive order for special expenses would cause him financial hardship. Disclosure now or at trial? [ 19 ] One purpose of the Family Law Rules is to facilitate early disclosure of relevant information in order to avoid or shorten trials. If disclosure of the documents sought is otherwise justified, it should be made now.

Adequacy of disclosure by the respondent [ 20 ] Other courts, in assessing claims for third party financial disclosure in family cases, have been particularly sensitive to evidence that the responding party has not made adequate disclosure (whether because of simple failure to disclose, or alleged inability to access the necessary information), or has made misleading disclosure. [ 21 ] The Ontario Court of Appeal considered the issue in Marcoccia v. Marcoccia, 2009 ONCA 162 .

There, a wife claiming child and spousal support had moved for financial disclosure of the records of a company from a third party who had purchased her husband’s interest in the company post-separation. The husband said he could not obtain the required records, and the company resisted disclosure. A motions judge made the order requested, and was upheld. The Court of Appeal found that that it would be unfair to compel the wife to proceed to trial without this disclosure, and observed: “While the order made is broad, Mrs.

Marcoccia has raised serious issues as to whether her husband has hidden assets and whether he has fully and accurately reported his income and the relevant years”. [ 22 ] My review of other cases indicates that where there is a demonstrated failure to disclose documents of significance on a relevant issue in a case, disclosure from third parties is ordered: • In Himel v. Greenberg, 2010 CarswellOnt 8621 , Justice Spies granted a request for disclosure from a company in which a husband was a minority shareholder. The company had resisted disclosure to the extent requested. • In Boisvert v.

Boisvert, 2006 CarswellOnt 4352 , the wife sought disclosure from a company to establish the value of the husband’s net family property at separation. The husband had an interest during the marriage in the company, but was estranged from his partners and could not obtain the required documents. The company resisted disclosure to the extent requested, but that disclosure was ordered. • In Cunningham v. LeFebvre,

(2006) O.J. 760 (S.C.) , a husband’s pleadings were struck for failure to comply with a disclosure order and a temporary support order. Justice Panet noted that the wife did not have access to the evidence required to prove her claims for support and equalization of net family property, and made an order allowing her to obtain “disclosure from any bank or other financial institution or any federal or provincial government agency” of any documents which the husband would have been entitled to access. In Martin v. Martin, (20070 O.J. 3432 (S.C.), the court made the same order in a similar situation. • In Valente v.

Valente , both equalization of net family property and support were in issue. The wife asked for records with respect to account balances at the date of separation, as well as tracing of the funds in those accounts. The banks did not object to the relief requested. The court was troubled by significant inconsistencies in the husband’s evidence about his income and property, and an alleged forgery of documents involved in the transfer of property. The motion was granted.

[ 23 ] Courts have denied requests for disclosure from third parties in cases in which the moving party could not point to serious deficiencies in disclosure on a relevant issue. This was true in Einstoss v. Starkman , 2010 CarswellOnt 4686 . There, Justice Kelly dismissed a motion from a former wife who asked that her former husband be ordered to request from “all major banks in Canada, Turks and Caicos and Florida” records for all bank accounts and credit cards in his name. This was also the case in Santilli v. Piselli , 2010 CarswellOnt 3317 .

There, Justice Magee rejected a request by a wife for disclosure of the “business and banking records” of a company owned by the paternal grandmother. The husband was an employee of the company. [2] [ 24 ] It is clear to me that Mr. Bennie’s disclosure, although voluminous, has been inadequate in furnishing accurate information as to his current resources. On this subject he has given information that is sometimes conflicting, and sometimes simply implausible. There are important gaps in the information provided. I refer below to some of the evidence that leads to that conclusion: • Mr.

Bennie acknowledges that for many years his spending has vastly exceeded his stated income, which he swears is between $20,000 - $30,000 annually. The gap is at least $70-80,000 annually in after-tax dollars. • The source of the money that bridges this income gap is unclear. There is some credit card debt, but Mr. Bennie says that the bulk of the money he receives to pay his expenses comes from family and friends, and primarily from his brother Dennis. He keeps no records of the money advanced, and to the best of his knowledge, neither do those who advance money to him. • Alex is one friend whom Mr.

Bennie says gives him money. Mr. Bennie claims not to know Alex’s surname. • In questioning, Mr. Bennie stated that the money from Dennis may be a gift—he doesn’t know. Despite requests, Mr. Bennie has forwarded no documentary evidence (except one cheque of $2703 from Dennis to his former solicitor for legal fees) establishing that the source of his additional funds are monies from Dennis. • Mr.

Bennie’s assertions about his income feature many inconsistencies. ▪ The financial statements and tax returns filed with the court state that his only income is commission from his work as a real estate agent through Landsite Realty. Landsite is a two-man operation, owned by a Stanley Jubas. (Despite a direction from Mr. Bennie, Mr. Jubas has declined to disclose statements of the transactions over the past two years involving Mr. Bennie.) ▪ However, in questioning, Mr.

Bennie acknowledged that he receives a “management fee” from a numbered company that owns a strip of commercial buildings on Bathurst Street in Toronto. He took pains to distinguish this payment from a commission. The fee is not shown on his financial statement in this case or in his tax returns. ▪ Further, in questioning Mr. Bennie acknowledged receiving approximately $170,000 in 2007 for “consulting services”, as distinct from his work as an agent. He acknowledged that those monies were deposited into an account for a numbered company that he purchased [3] .

He considered his withdrawals of money from this account as a “loan” to himself, and as such, the money was not shown as income on his tax return for the relevant year. It was not shown as income on the company return. ▪ Mr. Bennie acknowledged that he has abandoned bank accounts and opened new accounts in order to avoid garnishment by CRA and perhaps FRO. Despite his undertaking in questioning in June 2010 to forward statements of his latest active account, those statements have not been disclosed. Mr. Bennie’s lawyer promised during argument of this motion that they would be forwarded.

Position of the parties from who production is sought [ 25 ] As set out above, none of the financial institutions from which production is sought have raised objections to the request. Undoubtedly, the institutions will charge a fee for the search. In Einstoss v. Starkman, the wife asked that the husband bear the cost of the extensive search requested. That is not the case here. Ms. Tersigni is not asking Mr. Bennie to pay his lawyer to do the work of obtaining the disclosure, or to pay the bank fees charged.

If the order sought is made and undisclosed accounts with significant balances emerge, then it can be expected that Ms. Tersigni will ask Mr. Bennie to reimburse her. Availability of the documents from another source [ 26 ] If undisclosed accounts do exist, the other source of those documents would be Mr. Bennie. Thus, there is no readily available alternate source for the information sought.

Relationship of the non-party to the litigation and the parties in this case. [ 27 ] The financial institutions from whom disclosure is sought are “true strangers” to the litigation, but, as noted, do not object to the relief requested. [ 28 ] In my view, it is important to note that this is not a motion in which records are sought which have an impact on the privacy of third parties. For example, in some cases set out above, records were sought from a company which contained information concerning a litigant, as well as information concerning others who were not parties to the litigation.

The documents sought here pertain only to Leonard Bennie. Privacy and proportionality [ 29 ] In addition to the factors set out in the Ballard Estate case, I have in making this decision also considered the issues of privacy and of proportionality raised by Mr. Bennie’s counsel.

[ 30 ] The privacy interests of the litigant from whom disclosure is sought is a relevant consideration for a court dealing with a disclosure request. Bank and credit card records can reveal very personal information about the account holder. In cases in which a support payor is a T4 employee, and there is no credible evidence suggesting other income, I think that it would be excessive to order disclosure of such records. However, that is not the case with Mr. Bennie. I note that R. 20(24) limits Ms.

Tersigni’s use of any information obtained from questioning or disclosure orders to this case alone. [ 31 ] As for the issue of proportionality, as Justice Perelll observed in Boyd v. Fields , 2006 CarswellOnt 8675 , “just as non- disclosure can be harmful to a fair trial, so can excessive disclosure be harmful because it can confuse, mislead or distract the trier of fact’s attention from the main issues and unduly occupy the trier of facts time and ultimately impair a fair trial”. [ 32 ] I am concerned that a disclosure order of the breadth sought by Ms.

Tersigni would lead to a prolonged questioning with respect to Mr. Bennie’s financial situation over the past seven years. That is not relevant to the issue currently before the court. Mr. Bennie’s lawyer has made it clear that he is not arguing for a retroactive variation of any obligation he had pursuant to the agreement to pay special expenses in the past.

He is arguing that payment now of special expenses incurred in the past would cause him hardship because of his current financial circumstances. [ 33 ] In my view, the fair and proportionate order is an order requiring the financial institutions named to provide the information sought, but only for the period from January 1, 2010 to date. That should give Ms. Tersigni information about Mr. Bennie’s current situation. An order shall issue to this effect, incorporating the search parameters contained in paragraph 3 of the notice of motion. [ 34 ] W ith respect to the further disclosure sought by Ms.

Tersigni, I order as follows: 1 . On consent, Mr. Bennie shall provide a fresh sworn financial statement 2 . Mr. Bennie shall provide any documentary evidence available to him of the source of his payments of table support and all special expenses made since January 1, 2010 3 . Mr. Bennie shall advise of the name and contact information for the purported owner of 1202319 Ontario Ltd. 4 . Mr. Bennie shall obtain statements from Landsite Realty showing all transactions involving him for 2009, 2010 and 2011 to date, and pay any fee charged by Landsite for the release of these records. 5 . Mr.

Bennie shall provide the bank and credit card statement previously promised, set out in Exhibit E to Ms. Tersigni’s affidavit sworn April 27, 2010. [ 35 ] All the above disclosure shall be made by Mr. Bennie by April 22, 2011. [ 36 ] I make no order for ongoing disclosure of personal financial records requested. This matter should, if not resolved, proceed to trial quickly. [ 37 ] If costs are sought, than written submissions should be made to me within 30 days by the party seeking costs, with reply to be served and filed with a further 15 days. Released: March 22, 2011 Signed: Justice E. B. Murray

Appendix A State the order or orders requested on this motion. 1 An Order abridging the time for service and filing of this Motion. 2. An Order authorizing and approving service of this Motion at the main branch in Toronto of each of the particular financial institutions in respect of which the Order for disclosure requested herein is made. 3. An Order pursuant to Rule 19(11) compelling the search of the records of each listed financial institution and the provision to counsel for the Respondent of copies of all statements for all accounts statements, whether open or closed, as provided below, in the possession, power or control of the listed financial institutions: (

a) Names to be searched: (

i) Leonard Ian Bennie; Leonard Bennie; Leonardo Bennie; Leonardo Ian Bennie; (

b) Account holder's Social Insurance Numbers to be searched: (i) 481-366-755; (ii) 481-361-756. (

c) Corporate account holder name to be searched: (i) 1202319 Ontario Ltd. (

d) Types of accounts to be searched shall include, without limitation: (

i) Savings accounts; (ii) Chequing accounts; (iii) Joint Saving and Chequing accounts; (iv) Investment accounts; (

v) Registered Retirement Savings Plan accounts; (vi) Registered Educational Savings Plan accounts; (vii) Credit Card accounts; (viii) Line of Credit accounts; (ix) Mortgage accounts

xi) Secured Loan accounts. (

e) Financial institutions in respect of which this Order for record search and disclosure shall apply: (

i) Bank of Montreal; (ii) Canadian Imperial Bank of Commerce; (iii) TD Canada Trust; (iv) Royal Bank of Canada; (

v) National Bank of Canada; (vi) Bank of Nova Scotia; (vii) HSBC Bank Canada; (viii) ING Bank of Canada; (ix) President's Choice Financial Bank (

x) Laurentian Bank of Canada 4. An Order pursuant to Rules 1(8), 13(11), 13(12), 13(15), 13(17), 14(23), and 19(10) compelling the Applicant to: (

I) forthwith complete the compliance with his undertakings; (II) forthwith answer Questions taken under advisement; and (III) forthwith make all of his outstanding disclosure, including without limitation, (IV) providing statements for all of his personal and corporate bank and other accounts and credit cards through the statements issued for February, 2011, and thereafter, so long as this case is continuing, to provide all statements for these accounts and credit cards on an ongoing basis. 5.

An Order pursuant to Rules 1(8), 13(11), 13(12), 13(15), 13(17), 14(23) and 19(10) compelling the Applicant to provide copies of all of the cancelled cheques or bank draft duplicates and otherwise to substantiate the specific source of all payments of tuition, camp fees,

Section 7 expenses and support that he has made over the course of this case, whether paid: (

I) directly to the Family Responsibility Office or a third party (such as a school or camp); or (II) indirectly, by payment to his counsel for them to issue a Trust Cheque to the Family Responsibility Office or a third party (such as a school or camp). 6. An Order pursuant to Rules 1(8), 13(11), 13(12), 13(15), 13(16), 13(17), 14(23) and 19(10) compelling the Applicant to forthwith serve and file an updated and corrected Financial Statement. 7. Costs of this Motion on a full recovery basis. 8. Such further and other relief as counsel may advise and this Honourable Court deem just.