The Ordering of Production and Disclosure from a Non-Party

Jordan v Stewart, 2014 ONSC 5797

This case addresses the issue of the ordering of production and disclosure from a non-party pursuant to rule 19(11) of the Family Law Rules.

Background

The Mother brought a Motion to Change the existing child support order of Justice Czutrin, dated July 12, 2013. In so doing, the Mother brought a motion for financial disclosure from three corporations in which the Respondent Father held shares. The Mother submitted that she was unable to determine the Father’s income for support purposes until the requested disclosure was provided. In the order of Justice Czutrin, the court made no finding as to the Respondent Father’s income, as the court stated, “Mr. Stewart relies on his investments, largely managed by others, to support himself. The evidence suggests that the bulk of his income has never been from his work or employment, therefore his line 150 income tax returns do not reflect his income for guideline purposes” (paragraph 194).

Analysis

The Court commences its analysis of the Applicant’s motion for disclosure by considering Rule 19(11) of the Family Law Ruleswhich provides:

If a document is in a non-party’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 the non-party by special service,

1. 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
2. Order that a copy be prepared and used for all purposes of the case instead of the original.

The Court found with respect to the Respondent’s disclosure obligations, that he “has produced or caused to be produced a measure of disclosure from the Corporations” (paragraph 27). The question then becomes, “is the Applicant required to the balance of the disclosure requested from the non-parties?” (paragraph 28).

In Bailey v Bailey, the court lays down six criteria which “must be met to justify the court’s exercise of its discretion to order production and disclosure from a non-party pursuant to rule (1911) of the Rules” (paragraph 29). The six criteria are as follows:

1. the documents are in a non-party’s control;
2. the documents are available only to the non-party;
3. the documents are not protected by legal privilege;
4. it would be unfair for the party seeking the disclosure to proceed without the information sought;
5. the documents sought are relevant and necessary; and
6. notice is provided to the non-party.

The Court found that under section 21(1)(f) of the Guidelines, the Respondent is required to “produce the financial statements of the corporation and its subsidiaries, and a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom the corporation, and every related corporation does not deal at arm’s length” (paragraph 31). The Court further held that where the six-part test, as provided above, is satisfied, and where the Applicant establishes that unfairness would result without the requested disclosure, a Court may order more fulsome disclosure.

The Court then found that the Respondent’s interest in one of the corporations, JRSIL, differs from his interest in the two others, SII and CSL. The Court found that the Respondent’s interest differed as he has 100% ownership of the shares of JRSIL and is only a minority shareholder in the other corporations. The Court found, with respect to JRSIL, that Section 7 of the Guidelines requires an assessment of “not only the income of the Respondent but also his ‘means’, generally” (paragraph 36). As such, to determine the Respondent’s means, the court found that an assessment of the “extent of his assets and any dispositions or other dealing with those assets” would be required (paragraph 36).

In sharp contrast, the court found that the same is not true for the asset disclosure requested from the two other corporations, CSL and SII. As such, the Court did not order the disclosure as requested by the Applicant with respect to these two corporations.

In short, through the application of the six criteria as set out in Bailey, the court ordered further disclosure from the non-party, pertaining to the Respondent’s interest in JRSIL, but exercised its discretion and found no basis to order further disclosure regarding the Respondent’s interests in SII or CSL.