In divorce matters, particularly in highly contentious situations, spouses may attempt to hide some of their assets in order to impact any support awards ordered by the court. While full financial disclosure is a cornerstone of determining a fair award, hidden assets are not uncommon. In one recent decision, the husband in a divorce proceeding had repeatedly failed to comply with court orders for disclosure, and so a unique tact was taken in order to compel his compliance.
Multiple Orders Ignored
In a proceeding that had dragged out for more than four years, the husband had failed to comply with four separate orders of the court to produce full financial disclosure to the wife. In response to the most recent order, the husband had proved more than 150 pages of documents to the wife, however it had turned out to be mostly comprised of duplicates of items that had already been submitted. There were several items the husband had been ordered to submit that remained unaccounted for.
In response, the wife brought an application to dismiss the husband’s pleadings in the matter due to his lack of disclosure. In the alternative, she sought a further order to produce, this time with a penalty attached for each day of non-compliance.
“Exceptional and Egregious” Circumstances
The court was unwilling to dismiss the husband’s pleadings, given that he had demonstrated at least a degree of willingness to cooperate with orders. However, the court did note that the husband’s actions had been “exceptional and egregious”, noting:
The wife states that another court order alone will not compel the husband to provide the documents. Five other orders have already been made, he has paid the associated costs and yet he has not complied with them. All of this shows that he believes he can disregard court orders.
The court found that the husband was not in violation of the orders as a result of a lack of understanding or ability. The husband was a savvy financial investor and he had willfully kept certain information from his wife in direct contravention of the court’s orders. Given his demonstrated unwillingness to comply, the court felt that the wife’s suggested daily penalty may be the only way to compel his full disclosure. As a result, the court set a new deadline or his full and complete disclosure and ordered that the husband face a penalty of $500 per day of non-disclosure after that date. The court expressed clear frustration with the husband’s explanations for non-disclosure, stating:
Most of the outstanding items are easy to obtain. The husband simply has to write to financial institutions to request the information. If it cannot be provided, the institution can provide this response. The husband has to provide to the wife with copies of the requests and the responses. This is basic family law practice… The husband knows how to prepare a financial statement. Considering the passage of time, he should have been able to provide values for his assets and liabilities well before now.
This is the sixth court order requiring disclosure. Given the husband’s litigation history, I agree with the wife that the prospect of compliance with this order is very poor unless stiff consequences are imposed. These circumstances are exceptional and egregious.
It remains to be seen what effect the sanctions will have, but it may prove an effective option for spouses who refuse to comply with financial disclosure obligations in family disputes. Presumably, when all is said and done, the husband will also be required to cover any and all costs associated with the unnecessary delay of this matter.
For spouses who suspect that their former partner may be hiding or otherwise obfuscating assets in order to affect support findings, it is important to take action. There are practices that can be employed in order to locate assets such as the use of financial experts or forensic accountants. If you suspect that your former partner may be hiding assets, speak with an experienced family law lawyer right away to explore your options.
At Baker & Company, our Toronto family law lawyers are highly experienced in high-conflict divorce matters and support litigation. We are committed to making the process of legally addressing a family matter as clear and approachable as possible. Call us at 416-777-0100 or contact us online for a consultation.