Though financial disclosure is often considered a formality, it’s importance in family law proceedings cannot be understated. Absent proper financial disclosure, parties are unable to accurately determine their entitlements and obligations, resulting in delays and ambiguity for both parties. However, where lack of financial disclosure is deliberate, the court may have to resort to more significant punishments to distribute justice.
The Applicant and Respondent were married for 47 years, finally separating when they were 72 and 77 respectively. During the marriage, the Respondent had built a very successful real estate development and construction business. The Respondent was clearly wealthy with substantial assets and corporate interests, as well as significant real estate properties for both personal and investment purposes.
The parties had two children, both of whom were adults at the time of the proceedings. The parties’ son, Jimmy, was estranged from the Applicant, and was employed in the Respondent’s company. As will be evidenced below, Jimmy would often be used as a tool by the Respondent to deliberately skirt his disclosure obligations and deplete of assets at the expense of the Applicant’s claims.
In his reasoning, Justice Ricchetti highlighted the significance and foundational role that financial disclosure plays in family law proceedings. Unfortunately, this case exemplified a concerted effort to circumvent such obligations, resulting in significant waste of judicial resources and prejudice against the compliant litigant.
Justice Richetti highlighted a number of questionable transactions by the Respondent post-separation to purposefully deplete his assets and avoid his spousal obligations to the Applicant. The Respondent would conduct suspicious corporate reorganizations and transfer money to Jimmy and his family who would then “loan” it back to the Respondent and his companies. Such behavior, when coupled with the lackadaisical provision of financial disclosure presented as a calculated plan by the Respondent to frustrate the Applicant’s claims.
Justice Ricchetti then turned his attention to the three essential requirements for a finding of contempt of court, namely;
- That the order breaches must state clearly and unequivocally what should and should not be done;
- That the party who disobeys the order must do so deliberately and willfully; and
- The evidence must show contempt beyond a reasonable doubt.
Contempt orders in family law cases are meant to be implemented sparingly and as a last resort (Hefky v Hefky, 2014 CarswellOnt 2986), yetthey are still a necessary safeguard against the deliberate circumscribing of the administration of justice.
The court stated that it is unnecessary to prove that the alleged contemnor intended to put themselves in contempt. Rather, the applicant must only show that the faulting party deliberatelyor willfully performed an act which was designed to breach a court order. In other words, one must only intend to perform an act which is designed to result in the breach of the order. The moving party must prove the faulting contempt beyond a reasonable doubt. This high threshold is demanded given the quasi-criminal nature of an accusation of contempt.
It should be noted however, that the court does not allow a person to be found in contempt for the non-payment of a monetary order. In other words, a party failing to pay their support obligations cannot be found in contempt of court. However, such repeated violation of monetary orders may lead to an inference being drawn that the faulting party disregards the importance of complying with court orders.
In its application of the test to the Respondent’s actions, Justice Ricchetti held that his behavior warranted a finding of contempt. The Disclosure Orders were clear and unambiguous. The Respondent was also found to have willfully and deliberately breached said orders, as Justice Ricchetti had soundly rejected the Respondent’s evidence. There was a clear pattern of the Respondent providing dates that he would comply with the disclosure orders by, only to fail to adhere to his promises. Numerous suspicious transactions were also performed aimed at deliberately hiding assets from the Applicant. Taking the evidence together, Justice Ricchetti concluded that the Respondent’s willful and deliberate breach of the prior Disclosure Orders had been established beyond a reasonable doubt.
In his ultimate sentencing decision, Justice Ricchetti ordered that an investigative receiver be appointed to investigate on all of the Respondent’s financial circumstances, his dealings and transactions, and craft a report for the court’s eventual review. In addition, Justice Ricchetti ordered that the investigative receiver’s $100,000 retainer be funded through the sale of numerous properties owned by the Respondent, and provided the receiver the power to apply to the court to change its role to a possessory receiver. A possessory receiver, in contrast to an investigative receiver, is granted full control over a party’s assets and businesses for the purpose of preserving assets against a potential future judgment. This remedy is employed sparingly by the courts, and is reserved for matters demanding the court’s heavy hand in enforcement.
The case of Boutin v Boutin represents an extreme example of a party deliberately contravening their financial disclosure obligations, and the court’s implementation of an extreme remedy in response. While the appointment of an investigative, let alone a possessory, receiver is a rare outcome, one should not seek to follow the Respondent’s example. Deliberate breaches of clear and unequivocal disclosure orders can result in significant repercussions. One cannot hide from their spousal obligations forever, and any attempts to do so may result in even harsher judicial treatment.