We’ve talked before about the importance of financial disclosure in Family Law proceedings. We’ve mentioned the comment by the Supreme Court of Canada that the timely disclosure of financial information to be the “linchpin of a just and effective family law system” (Colucci v. Colucci, 2021 SCC 24, at para. 4); we’ve also noted the Ontario Court of Appeal ruling in Roberts v. Roberts, 2015 ONCA 450 where the Court called it “the most basic obligation in family law”.
That’s because without it, divorcing spouses risk unfair settlement outcomes, prejudicial proceedings, and delays in the broader litigation.
For example, if you and your spouse are embroiled in litigation over child support, it’s vital for each of you to provide detailed financial disclosure to determine your accurate incomes, so that the proper child support levels can be calculated as Canadian law requires. Anything less than that will not only encourage Family litigants to underreport their income, but it also runs the risk of doing injustice to you, your spouse, and – worst of all – your child.
Now, in a recent case called Carter v. Carter, the court has taken up the rallying cry yet again, to focus on the fundamental obligation that litigants have, to make full, accurate, and ongoing financial disclosure. The background of the case featured divorce proceedings where the husband had breached six prior court orders over the course of five years – all of which required him to come forward with his complete financial information.
Here are the Top 3 important points about financial disclosure to take away from the court’s ruling in Carter:
1) It’s Mandatory, and Continuing
- Financial disclosure has an important role in Family litigation. It plays a part in resolving disputes about important matters such as support and property division.
- For this reason, it is not optional.
- The duty also continues throughout the case – meaning you and your spouse must each update your information on an ongoing basis, if it changes through the course of the proceedings.
2) The Scope is Extensive
- The financial disclosure obligation is very broad in scope. It covers all relevant documents, including personal tax returns and tax assessments, corporation-related financial documents, business records. It can include pay stubs or other proof of income, bank and investment account statements, property appraisals and mortgage statements, pension, RRSP and savings and investments, and even life insurance policy information.
- In cases where one or more corporations is controlled by a spouse, the obligation to disclose also extends to corporate documents.
3) There are Consequences of Non-Disclosure
If you fail to comply with your financial disclosure obligations, the court may impose severe sanctions on you. These include:
- Compelling your cooperation through a court order.
- Striking out pleadings (which means your part of the case can be dismissed).
- Awarding costs against you.
- Making an order declaring you to be in contempt.
The messaging in Carter does not “reinvent the wheel” on topic of financial disclosure, but rather builds on many, many Canadian cases in the past. Collectively, this jurisprudence resolutely emphasizes this:
- Financial transparency is essential in family litigation.
- Courts take a strict approach against non-disclosure.
- Delays or selective disclosure can result in significant legal penalties.
- Disclosure is required even where income is complex, particularly when corporate holdings are involved.
Last but not least: Financial non-disclosure should never be a strategic option. Courts will always intervene to ensure fairness, and to prevent financial power imbalances in Family disputes.
