Tuesday, February 10, 2009

Family Law Case Bifurcation: Simioni v. Simioni

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"...[3] Two fundamental procedural questions are to be determined by the Court on this motion. First, should Denis be granted an order splitting the issues in this marital dispute and directing that a first trial be held respecting the validity of the Separation Agreement, and if so, on what terms? Regardless of the answer to that question, a second question remains whether and to what extent Silvana is entitled to now have the full financial disclosure she seeks.

[15] First, it should be accepted as non-controversial that both the Family Law Rules and the inherent jurisdiction of the Court provide ample authority and power to permit cases such as this to be split: Family Law Act, section 2(10); Rule 12(5). The jurisprudence confirms that this is an authority and power that ought to be exercised if convenient, and if the exercise of the power would be in the interests of justice. The interests of justice will be served if there are clear time and expense benefits to be gained from the bifurcation and determination of the threshold issue, provided no real or meaningful prejudice is caused to either party: Elcano Acceptance Ltd. et al v. Richmond, Richmond, Stambler & Mills, [1986] O.J. No. 578 (O.C.A.); General Refractory Companies of Canada v. Venturedyne Ltd., [2001] O.J. No. 746 (S.C.J.O.); Royal Bank of Canada v. Kilmer van Nostrand Co., [1994] O.J. No. 1476 (Ont. Ct. Jus.(Gen. Div.)).

[16] Nevertheless, it is equally important to remember that the splitting of a trial effectively denies the fundamental principle that as far as possible, multiplicities of proceedings are to be avoided, and thus the power to split a case should be regarded as one that is narrowly circumscribed and to be exercised in only the clearest of cases – in cases that exhibit the exceptional merit that calls upon the Court to exercise its inherent power: Courts of Justice Act, section 138; Elcano, above; Carriero (Litigation Guardian of ) v. Flynn, [2004] O.J. No. 3117 (S.C.J.O.). In light of this caution, the onus necessarily lies upon the party seeking to bifurcate to satisfy the Court on a balance of probabilities that if granted, severance will result in the “just, expeditious and least expensive determination of the proceeding on its merits”.: Merck & Co. v. Brantford Chemicals Inc., [2004] F.C.J. No. 1704 (F.C.C.) at para 4.

38] The reason claimed for this extraordinary request appears to be essentially cost and complexity related. There is no doubt that Denis’s financial affairs will be complicated and I expect disclosure will entail substantial expense. The tip-of-the-iceberg history of his and Silvana’s financial affairs reflected in the motions materials, and summarized above, make that evident beyond doubt. He has been a very successful businessman, and the enormous success of Ojon Corporation leading to its ultimate sale to the Estee Lauder Corporation for a substantial sale price following an estate freeze undertaken by Denis, unquestionably will have added to the complexity of his financial life. I accept that there will be significant cost entailed in providing financial disclosure in this case, involving accounting and tax experts and the expenditure of significant time and effort. I accept that without a determination of the validity of the Agreement, full blown disclosure would entail the production of marriage date value, separation date value for two separate dates, value at the Separation Agreement date, and current value.

[39] These factors, however, do not eliminate the need for Denis to comply, at least in part, with the disclosure obligations imposed upon him under our law. As Perell J. noted at paras. 13-14 of Boyd v. Fields, 2006 CarswellOnt 8675, adopting the approach of Rogers J. in Chernyakhovsky v. Chernyakhovsky, [2005] O.J. No. 944, the disclosure obligations mandated by the Family Law Rules are the be considered in light of Rule 2(3), and obtaining factual evidence in marital litigation is no longer to be “a game of hide and seek.” Equally, however, it is not to be used to cause delay or reap tactical advantage. The Court has to consider the burden imposed by the disclosure sought relative to its probative value, how it fits into the overall context of the case and whether it relates to a central issue in the case or only to matters on the periphery.

46] For reasons set out above, I have concluded that Denis’s motion to bifurcate ought to succeed, although as will be evident on different terms than those proposed. I reject Silvana’s contention that she will be severely prejudiced by a decision to bifurcate this proceeding as a result of the scarcity of resources available for future trial sittings, with these matters possibly not being resolved for three years or more. I reject that contention, not on the basis that it is not possible that she might not otherwise be correct, but rather on the basis that in circumstances where this Court determines to permit the extraordinary procedural remedy of trial bifurcation, as it intends to do in this case, the obligation rests with the Court to structure the procedure relating to the future progress of the severed litigation to ensure that the objectives of bifurcation are achieved. Those objectives are a speedier and more cost effective resolution of as many of the issues in the dispute as possible. I can assure both parties that I intend to ensure that these goals continue to be achieved, as I hope my orders in this matter will make clear.

47] Order to go as follows:

(a) Order severing trial and ordering that a trial of issues first be held relating to the validity of the June 29, 2007 Separation Agreement between Silvana Simioni and Denis Simioni;

(b) Counsel to prepare for me a proposed timetable and schedule of steps under which the litigation of the validity of the June 29, 2007 Separation Agreement will proceed to trial, such schedule to be provided to me not later than March 15, 2009. They may attend on me or arrange a teleconference as part of that process;

(c) Within a period of time to be determined by me after consultation with counsel under (b), and following their consultation with appropriate accounting and taxation advisers, Denis Simioni shall produce a Financial Statement as required by Rule 13 of the Family Law Rules as at June 29, 2007, as well as section 8 of the Family Law Act, and section 21(2) of the Federal Child Support Guidelines;

(d) Within a period of time to be determined by me after consultation with counsel under (b), Denis Simioni shall produce all minute books, closing books, constating and valuation documentation relating to the estate freeze of Ojon Corporation shareholdings, or any other corporation in which he may have had an interest prior to June 29, 2007;

(e) Questioning of the parties, to the extent not already completed, shall proceed on all materials necessary to permit the first trial to proceed on an expedited basis;

(f) I am to be designated as Case Supervision judge for this litigation, and no motions or other pretrial steps are to be taken by either party except in consultation with and as ordered by me..."

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