Court of Appeal Orders Husband to Pay $500-a-Day Penalty for Non-Disclosure of Financial Informationedit
A recent Ontario Court of Appeal decision shows the dangers of non-compliance with financial disclosure obligations in family law litigation, after a high net worth husband was ordered to pay his wife $500 a day for each day of non-compliance with the court order to produce financial information.
Divorce and support litigation between the husband and wife initially began in 2015. In the four years since then, five separate court orders were made regarding financial disclosure by the husband and yet the wife was still requesting compliance with those orders.
While the husband provided a number of documents in 2018 and 2019, the wife maintained that several items were still outstanding. Specifically, certain accounts had not been disclosed and were required because the husband distributed his money among various accounts. The wife also sought disclosure of his pension plan and updated financial statements regarding his assets and liabilities.
As a result, the wife brought a motion to strike the husband’s pleadings for failure to produce disclosure, or in the alternative, an order for production of disclosure with a penalty for each day that the husband failed to comply with the order.
The Parties’ Positions
The wife argued that the duty to disclose financial information is the most basic obligation in family law and that a court should not have to make orders requiring parties to disclose information.
The wife stated that the husband had the means to litigate and was quite savvy at investing and moving his money around. For instance, one of his investment accounts increased by over $1,190,000 from March 2017 to March 2018 and he earned $722,154 in 2018.
However, a series of deposits in his bank account could not be traced and the wife did not know where the children’s RESP funds had gone. She had to hire an accountant to make sense of the disclosure that had been produced.
The wife argued that another court order alone would not compel the husband to provide the documents, because five other orders had already been made; he had paid the associated costs and yet he has not complied with them. All of this showed that he believed he could disregard court orders. As a result, she argued in favour for a monetary penalty that would compel him to disclose the required information.
In response, the husband stated that he was not a businessman and was just an employee. He claimed that he did not have the records in issue. He also stated that he suffered from psychiatric problems.
Court of Appeal Decision
The court began by stating:
“Although a considerable number of disclosure items were outstanding when this motion commenced, the husband has made some disclosure between November 2018 and now. I am prepared to give the husband one last chance to provide the outstanding disclosure on strict terms.”
The court then set out a list of seven items that the husband would be required to produce in the seven days following the release of its decision.
However, the court also found that the husband would not comply with a further disclosure order unless there was a penalty.
The court noted that there was no medical evidence of the husband’s alleged psychiatric problems and most of the outstanding items were easy to obtain. The husband simply had to write to financial institutions to request the information. If it could be provided, the institution could provide such a response.
The court concluded:
“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.”
As a result, the court ordered the husband to provide the disclosure within seven days after the decision was issued and, if he failed to do so, he would have to pay a daily fine to the wife of $500 per day for each day of non-compliance commencing on the eighth day.
Separation and divorce are challenging for everyone involved. When dealing with custody or access disputes, matters involving spousal and child support, the division of assets, and other family issues, emotions can be your worst enemy. Having an experienced family lawyer on your side can help you stay focused and resolve disputes as quickly and amicably as possible.
At Campbell Bader LLP our family team has collectively spent more than twenty years advising clients about family disputes, including those involving high net worth individuals or complex matters.
We value and incorporate collaborative family law principles into our practice, but we’re smart enough to recognize when that approach won’t work for you and we adapt our strategy accordingly. To learn more about how we can help you, contact us online or at 905-828-2247.