FINANCIAL DISCLOSURE: PUTTING YOUR CARDS ON THE TABLE

Topic: Family Law April 25, 2016 by Carol Cochrane

In a decision of Justice Benotto released last year, Her Honour addressed the critical importance of financial disclosure in any family law proceeding:

“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 the administration of justice.”

Whether in Court or out of Court, family law litigation or negotiations require each party to put their cards on the table, so that there can be no issue as to the completeness and accuracy of the financial information being relied upon.  Some people may think that it is clever or strategic to withhold such information, but the contrary is in fact true.  Failing to meet this duty to disclosure can have some unexpected and very significant ramifications.

In a Family Court proceeding, the withholding of relevant disclosure may result in judicial sanctions being imposed.  When faced with a litigant who is refusing to provide necessary disclosure, a judge has the ability to make any of the following Orders:

a)    an Order dismissing any claim or defence put forward by the non-disclosing party;

b)    an Order requiring the non-disclosing party to pay costs;

c)    an Order declaring the non-disclosing party to be in contempt of Court (if the disclosure was Court ordered) and imposing a penalty, including the possibility of incarceration.

Further, by not providing financial information relating to a party’s income, a negative inference may be drawn by the Court and a level of income imputed to the non-disclosing party which may significantly impact on his/her support payment obligations or entitlements.
It is not only in litigation that financial disclosure must be produced.  A domestic contract (Cohabitation Agreement, Marriage Contract or Separation Agreement) may be set aside where a party fails to disclose his/her significant assets or significant debts at the time the contract was made.  It is by virtue of this provision in the Family Law Act that good family law lawyers will insist that a domestic contract not be signed in the absence of full and proper financial disclosure being exchanged.

If you intend to enter into a domestic contract or anticipate having to go to Court to resolve the financial issues between you and your partner, be ready to put your cards on the table – face up!

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