The Cost of Your Financial Secrets
An important aspect of many family law matters is the exchange of financial disclosure. The information pertaining to an individual’s annual income, as well as information pertaining to his or her assets and liabilities as at the date of marriage and the date of separation, is required to properly quantify child and spousal support obligations, if any, and calculate the equalization payment that may be owed from one party to the other. The cases that are resolved swiftly and amicably are those where each party is quick to disclose all relevant financial information.
Refusing to provide or hiding certain documents would almost certainly impede the ability of the parties to reach a resolution., So what are the consequences of doing this?
The matter of Bourgeois v. Bourgeois was before the Ontario Superior Court of Justice last year and Justice McGee was faced with this very issue. She had to determine whether or not the party causing delay as a result of a reluctance to provide the requisite disclosure should be responsible for covering some or all of the costs endured by the opposing party as a result.
The husband was self-employed. When parties are self-employed, their income is often difficult to calculate. Sometimes, the only way to access the documents you need is to convince the Court to Order that certain documents are relevant and that they must be disclosed.
In this instance, Orders were issued against the Husband on more than one occasion between December of 2008 and January of 2010 and he failed to abide by these Orders. When the parties moved to a Settlement Conference, it was determined that meaningful negotiations pertaining to any issue that revolved around the Husband’s income could not be conducted as a result of the Husband’s omissions or incomplete submissions.
The wife was successful in her pursuit of costs and was awarded substantial indemnity costs in the amount of $8,000.00, plus an additional $750.00 for preparing her cost submissions in advance of the October 2010 Settlement Conference. She did not receive full indemnity because some issues, specifically those related to the children apart from support, were dealt with properly at the Settlement Conferences. Justice McGee also explained that the bulk of the wife’s pursuit of costs should be addressed at the Motion returnable in February of 2011.
In her decision, released in January of 2011, Justice McGee explained that Mr. Bourgeois consistently failed to prepare for the Settlement Conferences by neglecting his disclosure obligations and as a result, he was responsible for the inability of the parties to work towards a full and final settlement. But was he was acting in “bad faith,” as this type of behaviour is discouraged by the Courts.
The concept of “bad faith” is sourced in Rule 24(8) of the Family Law Rules and this was part of the Husband’s argument. She explained that Mr. Bourgeois intended to inflict financial and/or emotional harm, for example by waiting 31 months to have his business valuated, and while Justice McGee did not agree that such an inference could be drawn, she made it clear that bad faith was not required in order to award costs at this stage of the proceedings.
Mr. Bourgeois still delayed the very necessary valuation and displayed other similar acts of indifference toward the gathering and production of financial documents. Ms. Bourgeois’ recourse lied elsewhere in the Family Law rule book.
Ms. Bourgeois’ position was, in the end, assisted by reference to Rules 17 and 18 of the Family Law Rules, which governs the conduct of Conferences. Subsection c. specifically mandates the disclosure of relevant evidence.
Rule 18 requires that Judges award costs – immediately – where a party is not prepared for a conference and/or where they have not produced the required disclosure or have otherwise failed to follow the Rules. For all of these reasons, the husband was in some hot water with the Court and had to pay a price.
This case is an important lesson to those engaged in Family Law litigation, as delaying or refusing to provide relevant disclosure will only, in the end, result in your spending more time in a Court room and paying a premium for doing so.