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Posts tagged ‘disclosure’

Can A Lawyer Claim “work product” To Prevent Opposing Counsel From Obtaining A Digital Copy of the Submissions filed with the Court?

work product

Can A Lawyer Claim “work product” To Prevent Opposing Counsel From Obtaining A Digital Copy of the Submissions filed with the Court?

Recently, a hotly contested family case resulted in a several day trial at the Ontario Superior Court.

Both counsel produced hard copies (paper copies) of their case briefs and written submissions and arguments at the end of the trial. Counsel for the husband also produced a digital copy. Counsel for the wife requested that a digital copy of what was submitted to the court should also be produced to the wife.

Counsel for the husband indirectly stated that since he was an officer of the court that the wife would have to accept a hard copy only. Husband’s counsel also mentioned that the digital copy he submitted to the Court was his “work product” and was concerned his arguments may be reproduced and used against his clients in future cases.

Given the level of distrust between the litigants and that the wife required the digital copy to complete her file; wife’s counsel indicated that as a matter of good practice the information, submissions, cases and arguments submitted to the court by one party should be also produced to the opposing party in the same format as it was produced to the court.

Wife’s counsel filed a motion with the trial Judge seeking production of the digital information filed with the Court by the husband. The trial judge agreed with the wife and ordered:

“The court received both paper and electronic copies of the respondent’s closing and case briefs. No exhibits or evidence were received in electronic form. I see no reason why the electronic copy should not be available to the applicant, as was the paper copy. Order to go that the respondent provide to the applicant an electronic copy of his closing and case briefs within thirty days of release of this decision.”

Accordingly, counsel are required to produce to the opposing party information filed with the court in the same format as filed with the Court. There is no “work product” defence or argument that justifies withholding production.

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit our main site.

Court Concludes Husband is Hiding Income – Takes Him Up on His “Go Ahead, Guess” Approach

hiding

Court Concludes Husband is Hiding Income – Takes Him Up on His “Go Ahead, Guess” Approach

A few weeks ago I wrote about a few court decisions Should a Spouse Who Refuses to Disclose Income Be Permitted to Appeal Court’s Best-Guess Estimate? http://tinyurl.com/bpvarm5  in which a paying spouse had failed or refused, after separation, to be forthcoming with his or her income. In such scenarios – as a means of fostering the general principle that parties should be scrupulously forthcoming in their disclosure to each other – a court will impute (i.e. take a best guess at) income levels, and set spousal or child support accordingly.

A recent Ontario court decision illustrates this. Stetler v. Stetler involved a couple who had married in 2001 and had a child together in 2007. The wife also had a child from a previous relationship. They separated in 2009.

At the time of separation, the husband owned a small construction business, and also participating in farming with his grandfather on the family-owned farm. Yet his declared income for 2009 was about $5,000, and for 2010 it was $4,000. He did not file a tax return for 2011 at all, claiming that he had no income whatsoever, and stated that he would not be paid for his work on the farm until the year’s corn crop was harvested.

Notwithstanding this alleged lack of income, the wife brought an application for child support, claiming that the husband was actually hiding his income.
The court considered the facts, and concluded that the husband’s construction business featured a good deal of “under-the-table” work for which he received cash payments, so that he could avoid paying income taxes. It also pointed out that by failing to call the grandfather to testify, the court was entitled to draw an adverse inference in relation to income from farming (i.e. that the grandfather would be unable to provide evidence that was supportive of the husband’s legal position). Similarly, the court was entitled to draw an adverse inference from the fact that the husband had failed to call his own sister to testify, especially since she acted as his accountant.

The court summed up its assessment as follows:

This is one of those cases in which the payor spouse puts his concerns about money ahead of his obligations to his spouse or children. Not only has the Applicant not filed an Income Tax Return for 2011 taxation year, but he claims to have earned no income whatsoever for the first six months of this year. He has a history of having income imputed to him by the courts both in his prior divorce proceedings and in this one. June 26, 2009, Taylor J. imputed annual income of $36,000 to this man. On April 21, 2011, Turnbull J. imputed $18,000 per annum from the first of May 2009 to the first of April 2011 and then $25,000 from the first of May 2011 on. In respect of his prior divorce proceedings his income was imputed at $37,500 in 2006 and on consent imputed at $33,700 in June 2008.

So not only does the Applicant not tell the tax authorities what he earns, but he has not shared that information with the court. He has clearly dragged his feet and simply said “go ahead – guess”.

The Applicant is a man who does not want to disclose his income. In fact I have come to the view that he is hiding his income. I found totally incredulous his evidence that his working on the farm almost full-time for his father produces no income for him, nor do I believe him when he says he has no expectation as to how much income his labour produces. He filed no income tax return for 2011 and says he has made no income for 2012. Apparently, he’s waiting for the corn to come in before he gets payment for both 2011 and 2012. He says he has no inkling as to the basis of his payment by his father, nor any expectation of what will be paid. I find this to be incredible.

The Applicant is quite prepared to concede that his income should be imputed. In fact, he asks that it be imputed at $25,000 per annum, just like Turnbull J. found in April of 2011. But he lays no foundation for that. I find that plea of his to be a ploy to avoid the court imputing greater income to him.

In the end, the husband’s income for child support purposes was imputed to be $36,000. Essentially, the husband was expecting the court to guess his income; if he was unhappy with the court’s guess – and in absence of concrete information which was in his possession – then he had only himself to blame.

For the full text of the decision, see:

Stetler v. Stetler, 2012 ONSC 4466; additional reasons at 2012 ONSC 5674  http://canlii.ca/t/fs8w1

 

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at www.RussellAlexander.com.

 

Spousal Support Advisory Guidelines and Disclosure Obligations

 

Spousal Support Advisory Guidelines and Disclosure Obligations

Whenever spouses separate, the often-long process of untangling their financial affairs begins.  Questions frequently arise as to the nature and scope of the financial disclosure that needs to be made as part of that process.   Although I have written previously about the scope and extent of this disclosure in Ontario, it’s important to put it into the context of how it relates to a court’s calculation of any spousal support obligations between the parties.

Spousal Support Advisory Guidelines

First, a little background:   Historically, the various Ontario courts’ approaches to calculating the spousal support that was owed from one party to the other had been a bit erratic, in that there was no uniform methodology of formula to be applied.   But several years ago, both the federal and provincial governments enacted Child Support

Guidelines, which established a formulaic approach to the calculation of child support, based on several factors including the paying parent’s income level.  After it was introduced, courts began using the income determined for the purposes of calculating child support as the baseline income for spousal support awards as well.   This was followed by the introduction of the Spousal Support Advisory Guidelines which – although not compulsory in nature – added some structure to the process, and added a focus on the income of the respective parties as a starting-point for the calculation of the precise amount of support that should flow from one to the other.

The Ontario Family Law Rules

Given that this income-based calculation remains the current state of the law in Ontario, the question of how each spouse’s respective bottom-line “income” is calculated remains a key factor in determining spousal support obligations.  It should be noted that the approach, guidelines and calculations used for the purposes of reporting income to the Canada Revenue Agency for income tax purposes is not that same as those used for determining support in Family Law.    While each spouse may provide providing his or her tax return, but this is just a starting-point for what must be disclosed.

Enter the Ontario Family Law Rules.  These Rules impose a general framework for the exchange of financial information between separating spouses, requires each spouse to provide the other with (among other things) a Financial Statement in a regulated form, and mandates that there be full and frank disclosure by each party of their respective information.

The Family Law Rules also encourage early disclosure, and mandate that all documents that are within a party’s control – or which are available to a party at his or her request – are to be listed and produced.  A court may also order that an outside party to the litigation be questioned.

There are sanctions for non-disclosure as well:  A breach of a court order for disclosure may result in the court imposing various penalties against the offending party, including certain costs sanctions or having his or her pleadings struck.  (However, if a party fails to comply with a disclosure order he or she is given an opportunity to show that they exercised due diligence in trying to comply with the order).

So What has to be Produced?

I have written more fully in previous blogs [Russell:  Add link] about the kind of information that goes into the preparation of each party’s Financial Statement, and the types of information and documents that must be provided.   Is she be noted that the Family Law Rules define the term “documents” to include “information, sound or images recorded by any method.”   This means that electronic documents – including e-mail correspondence – are also potentially covered and are subject to the obligation imposed on each party to preserve information.  Indeed, the court has certain penalties – all the way up a finding of contempt of court – that it may impose in situations where a party has intentionally destroyed evidence that pertain to a family law proceeding.

The scope of disclosure is very broad; however, this does not mean that it is unlimited.  In particular, courts are on the lookout for situations where one party is conducting a “fishing expedition” in connection with the information held by the other party, usually as part of a litigation strategy.  Moreover, courts – by way of an overall mandate to deal with cases justly and proportionately to their importance and complexity – are also authorized to curb excessive disclosure on the parties’ part, since this can negatively affect the litigation by adding delay and increasing the costs of the proceedings.

Getting Assistance is Key

When taken together, the Spousal Support Advisory Guidelines provide a framework for calculating spousal support using each spouse’s income as a starting point, while the Family Law Rules provide a framework for putting forth the documentation used to calculate that income.  It is accordingly important for separating spouses to understand how these Guidelines and Rules work, and to get competent legal advice on what their obligations may be.

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders.  For more information, visit us at  www.RussellAlexander.com

 

 

Supreme Court of Canada Clarifies Disclosure Principles

Supreme Court of Canada Clarifies Disclosure Principles

Although it does not spring from family law directly, the Supreme Court of Canada has recently clarified the important governing principles relating to the disclosure of third-party information, and these may have repercussions in terms of government-disclosure and privacy principles in general.

In Merck Frosst Canada Ltd v Minister of Health, the backdrop was simple: the drug company Merck had duly tendered a new drug submission to Health Canada, in keeping with regulatory requirements.   Certain other parties had formally applied for Access-to-Information requests in connection with those drug submissions, under the provisions of the federal Access to Information Act.    Without notifying Merck, Health Canada disclosed the records it held on Merck’s new drug submission to the other parties; needless to say, when it learned of the disclosure Merck objected, claiming that the documents should not have been disclosed at all under certain exemption provisions in the Act, or that at the very least it should have received notice in advance.

In defence of its decision to disclose without notice, Health Canada conceded that the Act incorporated certain third-party exemptions (allowing a government institution such as Health Canada to refuse to disclose a third party’s trade secrets, its confidential financial, commercial, scientific or technical information, or any competitive information that would result in financial prejudice to the third party if it were to be disclosed).  However it claimed – among other things – that it was unable to determine whether non-disclosure was justified in this case.

In assessing each party’s position, the Supreme Court of Canada set out important disclosure and privacy principles that are to govern in such cases.   They are:

• There must be a balance between the duty to protect third-party information on the one hand, and the general principle there should be access to government records, on the other.

• There is no automatic right to notice of disclosure; however, there is a fairly low threshold for the requirement to give such notice.

• Disclosure without notice will be justified only in the clearest of cases.

• A government institution (such as Health Canada) should give notice even where is doubt as to whether the third-party exemption applies.

• The government institution must make a serious attempt to apply the exemption, by reviewing each individual record to determine which portion, if any, may be exempted.

• In keeping with common sense, the third party who requests access to the documents should be as helpful as possible in identifying precisely what information might fall within the exemption, and to identify why disclosure is not permitted.  (Such parties will often be in a better position than the government institution to make these identifications).

• The decision of whether or not to apply an exemption to disclosure under the Act will also be governed by the question of whether disclosure could reasonably expected to cause “probable harm” to a party like Merck.

The Supreme Court of Canada then went on to clarify certain specific aspects of the Act’s exemptions, (such as the meaning to be given to terms such as “trade secrets” and “confidential information”) and provided further insight on the burden of proof on a judicial review of a decision by a government institution such as Health Canada not to acquiesce to the Access-to-Information request.  Ultimately, it held that in this particular case, Merck did not establish that it fell within the third-party extension.

This decision provides important guidelines on the Court’s view the disclosure of confidential information; as it potentially relates to family law litigation, it may have tangential impact on disclosure obligations between parties (particularly where there is a corporate asset), or in connection with the disclosure of health records by medical facilities.

For the full text of the decision, see:

Merck Frosst Canada Ltd. v. Canada (Health), 2012 SCC 3 (CanLII)  http://canlii.ca/t/fpvd1

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders.  For more information, visit us at www.RussellAlexander.com

 

 

 

Financial Disclosure – A “Necessary Evil” in Family Litigation

Financial Disclosure – A “Necessary Evil” in Family Litigation

In last week’s blog ‘The importance of diclsoure in family law settlements’  http://bit.ly/qsQaQi , a case named Ward v.Ward was reviewed, where the Ontario Court of Appeal considered the validity of a separation agreement that had been negotiated by two spouses. Among other things, the wife had claimed that the agreement was not valid because the spouses had not exchanged sworn Financial Statements leading up to the negotiations, and she later felt there had been some inconsistencies and non-disclosure relating to the husband’s financial affairs.

Ultimately, the Court concluded that even though neither spouse had exchanged sworn Financial Statements (which were not strictly necessary because they had agreed to participate in the collaborative law process, which does not involve going to court), they nonetheless each had sufficient knowledge of the other’s financial situations. Accordingly, there was no reason to set aside the negotiated separation agreement on the sole basis that there had been non-disclosure.

The dispensing with financial statements in Ward v. Ward is certainly not typical. Indeed, the full disclosure and knowledge of the financial circumstances of the parties is a vital part of the family litigation process, a point that was expressly emphasized by the Court in Ward v. Ward. In Ontario, this generally involves the preparation of a sworn Financial Statement by each spouse, which is embodied in specified court forms (Form 13 for support claims; Form 13.1 for property and support claims; both under the Ontario Family Law Rules, O. Reg. 114/99). It requires the party filling it out to list income from all sources, detail his or her living expenses, and provide the value of property as well as the extent of debts and liabilities at various time-points. This includes bank accounts, registered savings plans, credit card debts, and pensions. The form is long, cumbersome and – unfortunately – mandatory under the provisions of the Family Law Rules. A family law matter may be filed with the court, without it.

However, even in cases where the spouses do not intend to proceed to court (i.e. where they hope to resolve their differences by way of mediation or arbitration), it may be prudent for each of them to complete a Financial Statement, nonetheless.

This is because (perhaps ironically), the full disclosure of assets, debts and liabilities by both parties will actually serve to protect each of them. For example, as was seen in Ward v. Ward, under the Family Law Act a court has the power to potentially set aside a negotiated separation agreement in cases where there has not been full disclosure by a spouse; a sworn Financial Statement from both parties therefore amounts to a relatively easy way to ensure that there has been full disclosure. Also, the exchange of Financial Statements long before a court date will allow the parties’ respective lawyers to provide accurate legal advice on matters such as the range of child or spousal support that may be owed from one spouse to another; this can reduce or even eliminate the time that a court would have to spend determining the issue. Finally, the good-faith full and early exchange of comprehensive financial information sets the right “tone” for any subsequent litigation: it avoids one spouse having to compel the other to provide disclosure, which would require the court’s intervention. Plus any reluctance on one party to provide information may lead the court to conclude that he or she has something to hide.

In addition to being experienced in all areas of family law, Russell Alexander, Family Lawyers can assist with the preparation of Financial Statements in preparation for family litigation. For more information, visit us at  www.RussellAlexander.com

Husband Barred From His Own Divorce Trial

Husband Barred From His Own Divorce Trial

A recent Ontario Court of Appeal decision called Purcaru v. Purcaru confirmed that – although it may not happen often – in the right circumstances courts have the discretion to strike out a party’s pleadings and effectively bar them from participating in their own litigation proceedings.

In this case, the husband and wife were married for 7.5 years and had two children. They separated in 2003 and the wife sought a divorce in 2004. However, the litigation between them was very acrimonious and protracted, and over the next few years involved numerous court attendances and motions, as well as allegations by the wife that the husband had failed to comply with disclosure obligations and various interim orders. The husband suffered from depression and attempted suicide in 2008, and his recovery stalled proceedings even further.

The trial was finally scheduled for late 2008. Immediately before it was set to begin, and based on the assertion that the husband had committed multiple and continuing breaches of various non-depletion and restraining orders by the court, the wife brought a motion to strike his pleadings entirely, which would disentitle him from participating in the trial.

The trial judge granted this request: the husband’s pleadings and financial statements were struck, and he was precluded from participating in the trial except as an observer. The judge also granted the wife’s request for a divorce and her request for monetary relief.

The husband appealed unsuccessfully to the Court of Appeal. That Court found that – while it was an option that should only be used in exceptional circumstances where no other remedy would suffice – in this case the trial judge had appropriately used the discretion that all courts have to restrict the husband’s participation in the trial. Before making the ruling the trial judge taken appropriate steps to safeguard the husband’s interests: he had given the husband the opportunity to consult a lawyer, had emphasized that the husband could be prevented from presenting his case, and had given him a chance to either remedy or explain his failure to comply with the previous orders. The trial judge had also found that the husband’s participation would prolong the trial proceedings (which would be unfair to the wife), and had clearly turned his mind to the severity and potential consequences of the sanction he was about to impose.

Still, and despite the warnings by the trial judge, the husband continued to deny any wrongdoing and showed no indication that he would remedy his misconduct or comply with his disclosure obligations. In these circumstances, the trial judge had been entitled to impose a remedy that would provide a strong disincentive against parties breaching court orders, which in this case involved restricting this particular husband’s right to participate in the proceedings at all.

For the full text of theCourt’s decision in Purcaru v. Purcaru can be found at http://bit.ly/gYzRT9

Further information on family law and related issues is also available on our main website www.russellalexander.com