Apr 12, 2016

The Cancer of Secrets | Why not to hide assets in your family law case

J.D.G. v. J.J.V., 2013 BCSC 1274 (CanLII)

In JDG v. JJV, 2013 BCSC 1274, Justice Punnet heard an application by JJV for an order that JDG pay a fine pursuant to section 213 for his failure to provide his financial statement in accordance with the BC Supreme Court Family Rules and a subsequent JCC order. JDG’s financial statement was due originally on December 7, 2012 and the JCC order required it be produced by February 4, 2013. It was finally provided on April 10, 2013 after JJV filed an application for it to be produced. JJV’s application was heard by Justice Punnett on April 12, 2013 merely two weeks after the Family Law Act came into force and two days after the financial statement was produced.

After deciding that the FLA applied, and reviewing the law under the Family Relations Act, Justice Punnett cites the White Paper on Family Relations Act Reform at page 131:

Some current pre-trial enforcement tools – such as fines for lack of disclosure under section 92 of the Family Relations Act – are intended to prompt full and timely compliance with the rules that guide litigation. The fine however is seen as ineffective and is rarely used, even though securing adequate disclosure can be an extremely time consuming and costly exercise for a party.

Justice Punnett goes on to list the cases which were decided under section 92 of the Family Relations Act as follows (citations omitted):

  1. Where the defaulting party on an interim application provides an explanation that is accepted by the court, such as their belief that they had met their obligation when they authorized the release of information by their accountant, an order may not be made;
  2. Where the defaulting party has been emotionally incapacitated an order may not be made;
  3. If the defaulting party is shown to be well aware of the required disclosure and has failed to comply or simply ignored the requests for information a s.92 penalty may be ordered;
  4. Where an order for production has been made and ignored a s.92 payment will be ordered;
  5. Where there has been a “flagrant disregard” of the court process a s.92 penalty will be imposed;
  6. Where there has been an unexplained failure to disclose coupled with a delay in production of incomplete materials a s.92 order will be made;
  7. Where disclosure is deficient such as inadequate disclosure of assets on a form 89 financial statement and a failure to provide updated RRSP investment account statements there should be rebuke by the court; and
  8. An order may not be made where despite a failure to disclose, the court had sufficient information to, for example, determine income without the information sought.

Justice Punnett states at paragraph 17 that, with respect to non-disclosure, the purpose of FLA section 213 was to,

provide [the supreme and provincial] courts with a broad spectrum of measures to compel disclosure, including making an order based on attributed income, ordering payment of security or a fine, or payment to the other party for expenses incurred as a result of the non-compliance.

… The wide range of remedies will ensure [the supreme and provincial] courts may effectively compel adequate disclosure and will deter parties from delaying full disclosure.

Under the FLA, it is now easier for the court to order that a party pay a fine. A contempt order is not required as it was under the Family Relations Act. Section 5 specifically requires that parties to family law cases must provide the other parties will full and true information for the purposes of resolving the family law dispute. It is said that the goal of s.5 is to encourage full and truthful disclosure early on in the process in order to promote out of court settlement (the Honourable Shirley Bond).

Justice Punnett lists the court’s considerations at paragraphs 28 through 30. He states that the court should consider the circumstances of the case, the degree of non-disclosure, the reasons for the late disclosure and when it is made, the need for the information and whether the disclosure is complex. Late disclosure is not a “get out of jail free card” and the court should consider that the applicant had to go through the troubles of making the application in the first place. Considering all of this, Justice Punnett ordered that JDG pay costs thrown away of $1,500 (which includes disbursements) and a $500 fine.

Since Just Punnett’s decision, section 213 and JDG have been cited as follows:

  1. In JCP v. JB, 2013 BCPC 297, Judge Merrick in the BC Provincial Court ordered JCP to pay JB a $2,880 fine (reduced from $4,000 due to a lack of funds) for failing to disclose his income for child support purposes, despite having been reminded by the court;
  2. In Cully v. Cully, 2013 BCSC 2457, Justice Fleming ordered that the husband pay the wife a $2,500 fine and $2,000 in costs thrown away payable forthwith for failing to complete a financial statement and provide documents pursuant to the family rules and continued failure more than 11 months later;
  3. In TJB v. BAF, 2014 BCPC 290, Judge Challenger awarded Ms. F all of the legal costs she incurred which amounted to $13,617 as a result of Mr. B’s non-disclosure due to his incomplete and misleading disclosure;
  4. In Doman v. Ciccozzi, 2014 BCSC 866, Master Bouck awarded Mr. Cicccozzi lump sum costs of $1,500 in any event of the cause and ordered that Ms. Doman pay a $500 fine for Ms. Doman’s late disclosure in an application for disclosure;
  5. In Nearing v. Sauer, 2015 BCSC 58, Justice Fleming found at trial that where the respondent was found to have undisclosed assets, s.213 allowed her to consider the respondent’s concealed financial assets in the unequally dividing the claimant’s pension entirely in her favour;
  6. In Giachino v. Giachino, 2015 BCSC 1775, Justice Betton ordered that the husband pay the wife a $500 fine and $1500 in costs thrown away as a result of his non-disclosure pursuant to the family rules;
  7. In Healey v. Healey, 2015 BCSC 2196, Justice Harris ordered the husband to pay the wife a $2,000 fine and costs of the application due to the length of his delay in providing documentation of his income and failure to comply with court orders relating to disclosure;
  8. In TG v. JG, 2016 BCPC 63, Judge Gill ordered the respondent to pay the application a $600 fine as a result of his non-disclosure despite the fact that it was not intentional to delay the proceedings, but because it had the effect of delaying the proceedings.