Case law: Consequences for ongoing lack of disclosure

In Manchanda v Thethi 2016 ONSC 3776, Justice Myers begins his decision in this case about financial disclosure by asking: “When is enough, enough?” It is easy to see why he posed this question, as there had been more than 70 requests for disclosure, almost all of them made by the applicant mother, that had not been responded to by the respondent father.

Justice Myers provides a background of the Family Law Rules as they relate to disclosure, in particular Rules 2(2) ,(3) and (4), which relate to the court’s obligation to deal with cases fairly and Rule 13, which deals specifically with disclosure.

He notes that early and complete disclosure of financial information is essential to the court’s ability to meet its obligations, and then reviews a number of cases that confirm this. He refers to a Court of Appeal decision in the case of Roberts v Roberts [2015] O.J. 3236 ONCA 450, in which the court found:

The most basic obligation in family law is the duty to disclose financial information. This requirement is immediate and ongoing.

Failure to abide by this fundamental principle impedes the progress of the action, causes delay and generally acts to the disadvantage of the opposite party. It also impacts on the administration of justice. Unnecessary judicial time is spent and the final adjudication is stalled.

Financial disclosure is automatic. It should not require court orders – let alone three – to obtain production.

Justice Myer then comments:

The court cannot determine the value of a party’s property at the date of marriage or at the valuation date if the party does not disclose all of the property that he or she owned at each date. Without disclosure, there are no facts upon which the court can make the required findings to resolve the financial issues in dispute. . .

Requiring the less moneyed spouse to repeatedly come to court to try to slowly peel back the layers of the financial onion is still standard fare  . . . and it has to stop.

In this case, in mid-2015, on one motions date, Justice Horkins dealt with 60 information (disclosure) requests before she ran out of time.

More than two years into the case, Justice Myer was dealing with the wife’s motion to strike the husband’s pleadings because of his ongoing breaches of multiple court orders to disclose financial information. By this time, the case had been before a number of judges on many occasions, who had made order after order requiring the husband to produce specific documents, most of which he had ignored.

On one occasion, the husband provided what Justice Myer described as a “document dump,” in which he provided voluminous materials in a completely disorganized state so as to make them virtually useless to the wife. As a result, the Continuing Record was in a state of chaos. During the hearing, even the husband’s lawyer and assistant were unable to find specific documents when requested to do so by Justice Myer.

In making his decision, Justice Myer reviews the consequences for a breach of an order or of the Family Law Rules, as set out in Rule 18. These consequences include:

• An order for costs
• An order dismissing a claim
• An order striking out pleadings filed by the party in breach
• An order that documents not provided cannot be used
• An order for contempt

He considers only the basic documents that remained undisclosed, including the husband’s personal and business income tax returns, bank account statements, credit card statements and investment account statements.

In deciding to strike the husband’s pleadings, Justice Myer says:

A contested trial on the current or some slightly enhanced production would be a travesty. The trial judge would have thousands of pages of sound and fury signifying nothing. This is a case where the respondent’s non-disclosure, in my view, is sufficiently egregious to conclude that he does not intend to help the court promote a just outcome. It is exceptional and drastic in degree if not in kind.

As a result of this decision, the wife was able to proceed to an uncontested trial with respect to the financial issues in dispute, meaning the trial judge would make a decision based only on the pleadings provided by her. In addition, the husband was ordered to pay the wife’s costs of $18,650 for the case to this point.

ADDENDUM: The Ontario Court of Appeal has upheld the original decision and awarded further costs against the respondent. This case is available at: http://www.canlii.org/