legal cancer

A Cure For Legal Cancer

peter Uncategorised

Separations or divorces regularly involve financial issues. Whether it is about determining amount and duration of child or spousal support, or whether it is about determining the division of assets and debts, financial issues are most often front and center.

Far too often, one or both of the parties resists financial disclosure just like I resist dieting or trips to the dentist. Go figure, but the party resisting showing all of their financial cards is usually the one who is going to have to write the cheque. For more than two decades now, our courts across Canada have made decisions chastising financial non-disclosure and how it wastes court time, how it wastes the time and money of the people fighting, and how it can drag out an already nasty legal battle. To make the point clear, some Judges have labelled financial non-disclosure as the “Cancer of Family Law”. I think this catch phrase probably started with Justice Fraser of the British Columbia Supreme Court in 1994 and it has been adopted all of the way up to the Supreme Court of Canada when Justice Binnie, speaking for the court, confirmed that Financial Non-Disclose is indeed the Cancer of Family Law. So There!

You see, when the lawyers or the courts need to figure out how much child or spousal support has to be paid, or what the assets and debts are worth in order to figure out how to divide them, complete and accurate financial disclosure is essential. The failure to provide this disclosure quickly and accurately results not only in unnecessarily prolonged litigation, but the reasonably held suspicion by at least one of the parties that justice was not done.

If your case is dragging on because the other side is not making financial disclosure, you have tools at your disposal to remedy the problem. Last year the Ontario Family Law Rules were amended to reflect not only the concern about financial non-disclosure, but also to provide those tools necessary to remedy the problem.

Rule 13 now not only sets out specific details of the type of information that must be disclosed by each party (depending upon the financial issues in dispute), but also sets tight timelines for the delivery of that information. By way of example, Rule 13(3.1) now requires the parties who are dealing with a child or spousal support issue to deliver: Their last 3 years of Income Tax Returns and Notices of Assessment; most recent pay stub from employment showing year to date earnings; the last 3 years of financial statements for a business or practice owned by the party; details of all salaries, wages, management fees or other benefits paid to a non-arms-length business; details of the last 3 years of all partnership interests or drawings; the last 3 years of financial statements for any corporation owned or controlled by the party; details of any trust of which a party is a beneficiary including the last 3 years of financial statements for the trust; details of any pension, disability, EI or other income received by a party.

When the division of assets and debts (equalization) under Part 1 of the Family Law Act is in issue, Rule 13 (3.3) lists 13 separate categories and various sub-categories of information that the parties mustdisclose, with the idea being that all cards have to be on the table in order to allow the parties (usually assisted by their lawyers and financial advisors/valuators) and the courts to calculate, as quickly as possible, what the various assets and debts were worth on those two crucial dates – date of marriage and date of separation.

Now, it’s one thing to list what people have to disclose. The problem in the past has not so much been that people did not know what they had to disclose (experienced Family Law lawyers are supposed to tell them). The problem has been actually making them disclose. These same amendments to the Family Law Rules have now been amended to provide for speedy enforcement mechanisms. Prior to these amendments, the parties often had to wait to bring a motion after a case conference in order to get an order for production. Now, the changes to the Family Law Rules permit more immediate relief. Rule 13(11) provides that if a party believes that the financial disclosure provided by the other party does not provide enough information for a full understanding of the other party’s financial circumstances, the party seeking more information may make a detailed request and if the other party does not provide the information within 7 days, the party seeking the information may bring a motion and the court may order production of the information. Additionally, Rule 1 provides additional enforcement tools. Rule 1 (7.1 and 7.2) combined provide for the ability of a party, at any time, to obtain an order from the court requiring, among other things, disclosure of documents. A detailed review of Rule 1(7.2) in fact discloses a vast arsenal of weapons available to the court (upon request by the parties) to make orders at any time (which would include both at and before a case conference) in order to enable the court to “deal with cases justly” (the Primary Objective of the Family Law Rules).

Judges are as concerned about the Cancer of non-disclosure as you are. If your case is stuck in the mud based on non disclosure or other procedural wheel spinning, call me for a free consultation on how to winch your way out of the bog and back onto the road to resolution!

Contact our Toronto office at (416) 642-4928 or our Timmins office at (705) 267-7600 to arrange a free consultation.