BACKGROUND:
This case dealt with whether the tort of conspiracy can apply where family members and related corporations allegedly help a spouse hide income or assets to reduce their support obligations.
The parties married in 1997 and separated in 2012 after approximately 15 years of marriage. The Husband worked in the casino industry and held senior positions with companies connected to his father. During the family law proceedings, the Husband disclosed an annual income of approximately $125,000. The Wife believed that he had additional income or an ownership interest in the family’s casino businesses that had not been disclosed.
In 2013, the Husband’s father incorporated a company to manage the River Cree Casino, with an informal agreement that the Husband would act as project manager and receive 40 percent of the management fees. When the contract was bought out for $5.75 million in 2015, the Wife alleged that the Husband’s share was diverted to his father to reduce his support obligations, relying on memoranda and emails referring to money being kept out of the Husband’s hands until the divorce was finalized.
The Wife further alleged that the Husband had directed company employees to withhold management fees owing to him for May 2015. She did not discover those fees until more than two years later.
The Husband’s family members and the related corporate respondents brought a motion for partial summary judgment. The motion judge dismissed the conspiracy claim but held that the Wife could still ask the trial judge to impute additional income to the Husband when calculating support.
The Wife appealed.
ISSUE:
Can the tort of conspiracy apply where third parties allegedly help a spouse conceal income or assets to reduce their family law obligations?
ANALYSIS:
The Court of Appeal found that the conspiracy claim should not have been dismissed before trial because it was closely connected to the Wife’s support claim. Both claims depended on the same central question, which was whether the Husband was entitled to money from the family businesses and whether that money had been kept out of his hands to reduce the amount of support he would have to pay.
The motion judge had found that the Husband’s father was entitled to keep the entire buyout. However, she also suggested that a trial judge might later treat part of that same money as income belonging to the Husband. The Court of Appeal found that these conclusions did not fit together and created a risk of inconsistent findings.
The Court also confirmed that a conspiracy claim can be available in a family law case. Imputing income to the Husband may increase the amount of support he owes, but it does not hold relatives or business associates responsible if they helped conceal the money. In some cases, a separate claim against those third parties may be the only effective way to recover what is owed.
The Court did not decide that a conspiracy had actually occurred. It held only that there was enough evidence, including documents suggesting that money was being kept out of the Husband’s hands until after the divorce, for the issue to be decided at a full trial.
CONCLUSION:
The Court of Appeal allowed the appeal, set aside the partial summary judgment and ordered that the case proceed to trial before a different judge.
The significance of Leitch v. Novac is that family law remedies do not necessarily prevent a spouse from also pursuing a civil conspiracy claim. Where relatives, friends or business associates allegedly participate in hiding income or assets, they may face direct legal consequences rather than remaining outside the family law proceeding.
Ultimately, Leitch does not mean that every instance of incomplete financial disclosure will support a conspiracy claim. The conduct must still satisfy the legal requirements of the tort. However, where there is evidence of a coordinated effort to conceal income or property, the claim cannot be dismissed simply because support legislation provides other potential remedies.
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