This case involves a motion by a mother requesting financial disclosure from the father, and the father’s mother, who is a non-party in the legal matter.
The parties live separate and apart in the matrimonial home with two children, aged 12 and 10. The mother claims the date of separation is July 15, 2021, and the father claims the date is August 9, 2022.
The mother argues that the father transferred $1.5 million to his mother for the purpose of defeating her claim for support and equalization of net family property under the Family Law Act.
These transfers might be viewed as a fraudulent conveyance and could lead a court to conclude that there should be an unequal division of net family property pursuant to s.5(6)(d) of the Family Law Act on the basis that the father has intentionally depleted his net family property.
The mother also asserts that both the father and his mother have been conspiring against her since their brief separation in 2016, citing instances where she believes the father has not been transparent about his finances in the provided financial disclosures.
- Should the father be required to make further financial disclosure?
- Should the father’s mother be required to make financial disclosure?
Should the father be required to make further financial disclosure?
In family law proceedings, there is an immediate and ongoing obligation for full and frank financial disclosure (Manchanda v Thethi, 2016 ONCA 909). Payors of support have a duty of full and honest disclosure (Michel v Graydon, 2020 SCC 24).
Any requests for financial disclosure beyond the specific items required by the Child Support Guidelines and the Family Law Rules must be relevant and proportional to the case (Mawhinney v Ferreira, 2023 ONSC 1357, at para. 12). When assessing the proportionality of a disclosure request, the burden it places on the disclosing party in terms of time and expense should be considered (Kovachis v Kovachis, 2013 ONCA 663).
In this case, the trial judge found that the father should make the requested disclosure for several reasons. The mother claims that the father repeatedly told her that she would receive nothing if she decided to separate from him, and during their period of separation in 2016, both parties sought advice from divorce lawyers. The father transferred a total of approximately $1.5 million to his mother in 2020 and 2021 without offering an explanation for these transfers. Additionally, since 2016, the father increased the debt on most of his rental properties and it remains unclear what happened to those funds.
The court ordered the husband to comply with the mother's request for disclosure, citing his inconsistent positions regarding his role in the family business and the level of control he has as reasons to require more information. Despite being an employee without a T4 slip, his Line 1500 income likely does not accurately reflect the amount of money he has available to pay support as the Director of the family company. Within 30 days, the husband was ordered to comply with section 21(2) of the Child Support Guidelines and provide all necessary financial disclosures for the past three taxation years.
Should the father’s mother be required to make financial disclosure?
The mother also sought an order against her mother-in-law for financial disclosure dating back to 2016.
Rule 19(11) of the Family Law Rules states:
(11) If a document is in a nonparty's control, or is available only to the non-party, and is not protected by a legal privilege, and it would be unfair 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 on the 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 principles governing a motion for disclosure from a non-party were outlined by Madsen J. in Weber v Merritt, 2018 ONSC 3086, paras. 29-38:
- The onus on a motion for non-party disclosure and/or questioning is on the moving party (Ontario (Attorney General) v Ballard Estate, 1995 CarswellOnt 1332 (ONCA)).
- The starting point is to consider the context, and the purpose for which the Rule is invoked. Ireland v Ireland, 2011 ONCA 623 (Ont. C.A. [In Chambers]) at 28.
The Court has held that the test under Rule 19(11) is an objective test that requires an analysis outside the litigant's belief system: "Suspicion and conjecture will not suffice." See Santilli v Piselli, 2010 CarswellOnt 3317 (Ont. S.C.J.) at paragraph 12. There is no reason that the test would not be the same under Rule 20(5).
In this case, the court determined that the request for the company's financial information through the husband's mother (the sole shareholder of the company) should be postponed until the husband produces the required documents as per the court's decision. Instead of dismissing the request, the court ordered the adjournment of this aspect of the motion sine die (without future date).
The husband's mother was ordered to provide personal bank statements for joint bank accounts held with her son. The court found that the importance of understanding why $1.5 million worth of family property was transferred without apparent reason over the last three months, possibly to undermine the mother's support and equalization claim, outweighed privacy concerns.
The court concluded that the wife's request for documents was relevant and proportional to the issues and denying it would amount to a denial of justice for the wife.