Financial Disclosure in Family Law Cases, Don’t Hide; It’s Best to Provide! - LawNow Magazine

Financial Disclosure in Family Law Cases, Don’t Hide; It’s Best to Provide!

Family Law ColumnNavigating the family law system without a lawyer can feel overwhelming, but many successfully find their way.  One of the biggest stumbling blocks for self-represented individuals is a resistance to provide sufficient financial information.

In order to properly negotiate or litigate child support, spousal support, or matrimonial property, the parties need to have accurate information about each other’s incomes, assets, and liabilities. Generally, more information is better. This way, everyone, including the court, can feel confident that the outcome is fair.  Unless there is some compelling reason to withhold the information, it’s best to simply share it. Failing to provide such financial disclosure wastes time and money for everyone involved in the dispute. It’s nearly impossible to even get started talking about how to resolve financial matters until the appropriate information has been shared.

Relevant and Material

The general rule of disclosure is:  that which is “relevant and material” must be provided to the other party.  This is defined in Alberta Rule of Court 5.2 as anything that:

“could reasonably be expected

(a) to significantly help determine one or more of the issues raised in the pleadings, or

(b) to ascertain evidence that could reasonably be expected to significantly help determine one or more of the issues raised in the pleadings.”

A non-lawyer may find it difficult to know what falls into this category.  Also, when relationships break down, emotions can cloud a party’s sense of what is reasonable. The requesting party must balance the necessity of obtaining relevant financial information with seeking information for curiosity’s sake or to be malicious.  The providing party must balance the requirement to provide relevant information and the desire to keep finances private or to be difficult.

What is relevant and material will depend on each case, but information about one’s income is always relevant for support and the information about the value of assets and debts is always relevant for property division.  Other kinds of information may not be quite so obvious.  For example, health information is usually not relevant. However, if someone is claiming they cannot work due to their health, then it is. So long as the information sheds light on a point in the dispute, it is likely relevant and material.

Generally, more information is better. This way, everyone, including the court, can feel confident that the outcome is fair. Unless there is some compelling reason to withhold the information, it’s best to simply share it.

A Duty to Disclose

Sections 21-25 of the Federal Child Support Guidelines set out an obligation on parents to provide necessary income information.  The courts have also held that parties involved in a dispute over matrimonial property have an obligation to provide full and honest information about matrimonial assets.

Justice Abella of the Supreme Court of Canada noted in Rick v. Brandsema, 2009 SCC 10 that special care must be taken to ensure that negotiations between separating couples are free from “informational exploitation”. A party has a “duty to make full and honest disclosure of all relevant financial information”.  Further, Justice Moen of the Alberta Court of Queen’s Bench noted in Brown v. Silvera 2009 ABQB 523 that parties should not have to on a scavenger hunt to ascertain family assets. Again, she notes that parties have an obligation to provide all information necessary to determine the value of matrimonial property, even if it is not specifically requested. Concealing or misrepresenting assets is not acceptable.

The risk of not fully disclosing relevant financial information is that the case may be unnecessarily drawn out, agreements that are reached can be overturned, and significant costs can be awarded against a party.

Obtaining Financial Information

In ideal circumstance, parties voluntarily exchange all relevant financial information.  This saves everyone involved time and money, including the court. Justice Moen of the Alberta Court of Queen’s Bench noted in Brown v. Silvera 2009 ABQB 523 that parties should not have to on a scavenger hunt to ascertain family assets.  It starts negotiations off on a good note and enables the parties to get to the matters at hand, which are setting amounts for support and dividing property.

When this does not happen, there are steps that can be taken to obtain the necessary relevant and material information.

A. Notice to Disclose (Form FL-17)

The starting point for obtaining financial information is usually to file a “Notice to Disclose” (form FL-17).  This is a request for the information set out in s. 21 of the Federal Child Support Guidelines as well as some additional information.  Alberta Rule of Court 12.41 sets out what information is requested using this Form.  Only in the rarest occasion would a party be exempt from providing this very basic information.

When Form FL-17 is filed, a court date is also set for at least 30 days later.  If the information is not provided by that time, the court can order that it be provided and/or order costs against the party who has not provided the information.  Also, the court can draw an adverse inference against the party and impute their income. In other words, the court can assume that the party has something to hide, and hold it against them.

If there is some reason that a party cannot collect all the information within 30 days, they can ask for an adjournment and it will be granted if it is reasonable in the circumstances.  It’s best to talk to the lawyer who filed the Form FL-17 before the court date arrives, as it may be adjourned by agreement.  This saves the lawyer and the court time and resource.

B. Questioning

Alberta Rules of Court 5.17-5.33 deal with Questioning (formally known as Examination for Discovery).  During Questioning, one party, or their lawyer, asks the other party questions under oath to obtain necessary information.  The Questioning party can ask for Undertakings, which are promises to provide further documents.  When the information provided voluntarily or in reply to a Form FL-17 is not enough to fully answer address the issue, a Questioning may be necessary.

If a party refuses to answer relevant questions or to provide relevant documents, the court may intervene to order a response, order costs, and/or may make an adverse inference about the failure to provide the information.

Conclusion

In summary, exchanging financial information is necessary to resolve financial disputes.  A party has obligation to provide all relevant information.  Therefore, in most cases, everyone’s time and money is put to the best use when relevant and material information is voluntarily exchanged.

 

Authors:

Sarah Dargatz
Sarah Dargatz
Sarah Dargatz has been practicing family law since 2009. She is currently a partner at Latitude Family Law LLP.
 


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