Drawing The Line: Extended Families May Face Conspiracy Claims In Assisting Child Support Evasion – Leitch v Novac 2020 ONCA 257

When a couple divorces, it is common for extended family to provide support for their loved ones. Some families get involved and assist with finances while others provide emotional support for the separated spouse. While most families are invested in the outcome of a couple's divorce, some families take extreme measures to ensure that the separated spouse reduces his or her financial obligations for support or property. In the past, when a spouse hides income or assets with the assistance of extended family, the court's sanctions have largely been limited to an order of costs against the offending spouse or a finding of contempt. While claims against extended family members have been made in the past, these claims were uncommon and were largely unsuccessful.

In recent years, the Ontario Court of Appeal changed the landscape on conspiracy in permitting a conspiracy claim against a spouse's family for assisting him to divert income payable for child support. In  Leitch v Novac 2020 ONCA 257, the wife sued her husband, her husband's parents, a family corporation, and several trusts and trustees, alleging that her husband's family and  entities conspired to defeat her family law claim and conceal her husband's assets and income. After the couple separated, the husband's father incorporated a company to provide management services to a casino operation. The father and husband agreed orally that the husband would receive 40 percent of the management fees over the life of the contract. Before the contract ended, the casino owner bought out the contract for nearly $6 million and the lump sum was paid to the father's corporation. Instead of providing the husband's 40 percent share for spousal and child support, the husband's father kept all the income from the buyout.

The father, the corporations, and the trusts brought a motion for partial summary judgment to have the claims of conspiracy dismissed before trial. The motion judge awarded partial summary judgment, concluding that there was no unlawful conspiracy and that the wife did not establish damages but that the wife could still pursue a claim to impute additional income for the purpose of determining support. The wife appealed the summary judgment order, the costs award and the order for security for costs and preservation of assets to the Ontario Court of Appeal.

The Court of Appeal was asked to consider whether the motion judge erred in law in awarding partial summary judgment and in her analysis of the tort of conspiracy.

Ontario Court of Appeal Allows Appeal Against Extended Family For Conspiracy

In order to claim conspiracy against the extended family and the related entities, the wife had to prove whether or not the means used by the father and the husband were lawful or unlawful, whether the predominant purpose of their conduct was to cause her injury, or if the conduct was unlawful, whether the father and the husband should have known that injury to the wife was likely to result.

The Ontario Court of Appeal allowed the wife's appeal and emphasized the importance of the tort of conspiracy in family law where a third party assists a payor in hiding income or disclosure. Justice William Hourigan asserted that if the tort of conspiracy was not available, co-conspirators would be able to facilitate non-disclosure and are willing to “break both the spirit and letter of the family law legislation to achieve their desired result, including by facilitating the deliberate hiding of assets or income.”¹ If the Court of Appeal accepted the motion judge's analysis, co-conspirators who engage in conspiracy could do so with impunity. The Court of Appeal noted that the tort of conspiracy would allow judgment against a co-conspirator which is often the only means by which a recipient will be able to satisfy a judgment.

Further, the Court of Appeal addressed the denial of justice that may occur in family law cases where third parties assist litigants, referring to these third parties as “invisible litigants”. Beyond providing emotional support, invisible litigants become active participants in litigation to achieve their desired result which include facilitating nondisclosure and deliberating hiding assets and income. Using the tort of conspiracy would be necessary in certain situations to ensure fairness and justice in family law cases.

Conclusion

The Court of Appeal's decision in Leitch  expands the tort of conspiracy in family law within Ontario. This case should be regarded as a reminder that non-disclosure and deliberate concealment of assets and income would not be tolerated. Family members who act as invisible litigants are not immune from liability and should be cautious in interfering with family law disputes.

Co-Authored by Abby Leung

Footnote

1 2020 ONCA 257, para 45.

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Ms Zakiya Bhayat
Devry Smith Frank LLP
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