The phrase "non-disclosure of assets is the cancer of matrimonial property litigation" is an oft-quoted phrase, arising from the seminal case of Cunha v. Cunha, 1994 CanLII 3195. In Cunha, the Honourable Mr.
As a result of Cunha, family law cases across BC and in fact across
The other issue that often arises in non-disclosure cases is where those undisclosed assets have gone. Were the assets dissipated? Frittered away on lavish living expenses or depreciating assets? Transferred to third parties, so that the non-disclosing party could effectively become "judgment proof"? What if the third parties had actively assisted in the deception, helping the concealing party by allowing for a fraudulent transfer of assets for little or no consideration?
Until recently, the only relief that an innocent party could obtain in such a case was an unequal division of the existing assets and an award of special or solicitor/client costs. The assets that had already been squandered or transferred to third parties would typically be impossible to recover. The innocent party could attempt to seek relief from the third parties directly by suing the third parties under the Fraudulent Conveyance Act, however, that was often an uphill battle, with little likelihood of success.
However, a recent
The husband's father, mother, and the management company then filed a motion for partial summary judgment, to dismiss the wife's conspiracy claim. The motion judge awarded the partial summary judgment and found that there was no unlawful conspiracy. The motion judge found that the husband's father had the right to allocate the entire sale proceeds of the buyout to himself, but also that at trial, the wife could still pursue a claim against the husband to have additional income imputed on him.
[44] As the
[45] There is a related malady that often works hand-in-hand with nondisclosure to deny justice in family law proceedings. The problem is what I will call "invisible litigants". These are family members or friends of a family law litigant who insert themselves into the litigation process. They go beyond providing emotional support during a difficult time to become active participants in the litigation. Usually, their intentions are good, and their interference makes no difference in the ultimate result. However, sometimes they introduce or reinforce a win-at-all-costs litigation mentality. These invisible litigants 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.
[46] If we were to accept the analysis of the motion judge, co-conspirators who engage in such behaviour could do so with impunity. Contrary to the observation of the motion judge, [page599] conspiracy is not a "blunt instrument" to respond to this misconduct. It is a valuable tool in the judicial toolbox to ensure fairness in the process and achieve justice. If the tort of conspiracy is not available, then co-conspirators have no skin in the game. Their participation in hiding income or assets is a no-risk proposition. If their conduct is exposed, all that happens is that the payor will be forced to pay what is appropriately owing. If there is to be deterrence, there must be consequences for co-conspirators who are prepared to facilitate nondisclosure.
[47] There is a further practical reason for permitting the use of the tort of conspiracy in family law claims. Where income or assets have been hidden with the assistance of a co-conspirator, often the family law litigant will be effectively judgment-proof. That, after all, is the whole purpose of the conspiracy. In those circumstances, the imputation of income or the inclusion of hidden assets into the net family property calculation will be a futile exercise, as the recipient cannot collect on what is owing. A judgment against a co-conspirator will often be the only means by which a recipient will be able to satisfy a judgment.
The key takeaway from this case is that there continues to be judicial concern about parties failing to disclose all of their assets and income in family law litigation. Parties who engage in such deceptive conduct, including third parties who assist in such deceptive conduct, put themselves at risk of costs awards and significant judgments against them. For more information regarding non-disclosure of assets or any other family law issue, please contact any member of our
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