Court Warns that Failure to Provide Financial Disclosure Can Warrant More Intrusive Remedy

Written on behalf of Shariff & Associates

Financial disclosure is one of the most important obligations between parties in family law matters. Courts have explained that nondisclosure by parties can complicate cases, exacerbate conflict, and hinder resolutions. Courts have further emphasized that disclosure should take place without the need for judicial intervention. However, when a party fails to disclose information, courts can ensure that parties comply with their legal obligations. The case of Boutin v. Boutin highlights the issue of non-compliance which arose where one party’s failure to produce disclosure warranted significant intervention. The matter resulted in the court appointment of a receiver to ensure that disclosure was made.  

Financial Disclosure Crucial to a Fair Resolution 

In Boutin v. Boutin, the parties were married for 47 years. During that time, the respondent, Mr. Boutin, built a successful real estate business. After the parties separated, there were numerous appearances before the Court in which the applicant, Mrs. Boutin, sought financial disclosure from Mr. Boutin. 

Four disclosure orders were made over eighteen months, all of which required Mr. Boutin to make detailed financial disclosure of his real estate interests and produce a business valuation and income report. The fourth order granted Mr. Boutin a final 60-day period during which he was required to provide accurate disclosure. However, his disclosure remained incomplete, and Mr. Boutin failed to abide by his obligations under the Family Law Rules.

Failure to Provide Disclosure Results in Contempt Hearing

During a contempt hearing, evidence was presented to support the argument that Mr. Boutin deliberately breached the orders. Further, evidence suggested that he was involved in improper, and possibly fraudulent, financial dealings aimed at reducing his assets in an effort to prejudice Mrs. Boutin’s claims. When the case reached Justice Ricchetti, he expanded upon the importance of financial disclosure in family law. 

Rule 13 of the Family Law Rules requires the parties to make complete and accurate disclosure to the other. As the Court explained, this enables the parties to participate in informed discussions that will assist them in reaching an equitable resolution, or may help facilitate a fair judicial determination of the issues. However, when full disclosure is lacking, the other party faces prejudice in advancing their claims. The Court noted that, such as in this case, the “failure to make complete and accurate disclosure leads to lengthy and unnecessarily complex family law proceedings, unreasonable positions, many unnecessary motions, [and] high conflict situations.” 

Appointment of a Receiver to Provide Disclosure is Justified

In light of Mr. Boutin’s failure to complete financial disclosure, Mrs. Boutin brought a motion seeking the appointment of a receiver pursuant to Rule 26 of the Family Law Rules and section 101 of the Courts of Justice Act. Justice Ricchetti acknowledged that the appointment of a receiver was available in accordance with the legislation mentioned above and that there was no restriction on the type of receivership order which could be made. 

A court appointed receiver acts on behalf of the court, instead of acting for either party, and acts as a fiduciary role to all the parties. Consequently, the receiver must remain neutral and impartial throughout the duration of the litigation. 

Function of Receivers

The judge looked to the decision in Paulpillai Estate v. Yusuf, which considered the function of receivers during legal proceedings. In Paulpillai Estate v. Yusuf, the Court explained that receivers could be appointed with investigative powers in order to gather information and investigate the affairs of the parties and to protect the parties’ interests pending the outcome of the case. 

Scope of Investigative Receivership

The scope of an investigative receivership was considered in Akagi v. Synergy Group (2000) Inc. The Ontario Court of Appeal remarked that such a tool enabling the investigation of a party’s affairs and transactions will be a proper exercise of the court’s authority. However, the Court also noted that the appointment of a receiver is an “extraordinary and intrusive remedy and one that should be granted only after a careful balancing of the effect of such an order on all of the parties and others who may be affected by the order.” 

In the case at hand, Justice Ricchetti found that Mr. Boutin was motivated to defeat Mrs. Boutin’s claims for spousal support and equalization of family property. The Court could not identify any mitigating factors as Mr. Boutin had no remorse for failing to comply with the disclosure orders, despite the finding of contempt and financial sanctions from the Court. 

The Court found that several penalties were deemed necessary, including a financial penalty, the appointment of a receiver to investigate and report on Mr. Boutin’s finances, and payment of the costs of the hearing. 

Intrusive Remedy Warranted After Failure to Comply with Disclosure Obligations  

While the Court accepted that the appointment of a receiver is an intrusive remedy, the circumstances of this case warranted that intervention. 

Firstly, there was a serious issue at stake in determining the equalization of family property and spousal support, both of which required accurate financial disclosure. 

Secondly, there was evidence that Mr. Boutin attempted to move assets by way of non-arm’s length transactions, which could result in Mrs. Boutin facing irreparable harm without the appointment of a receiver. 

Additional considerations also weighed in favour of appointing a receiver because the outstanding financial information was under Mr. Boutin’s control, and Mrs. Boutin had no other means of obtaining information on Mr. Boutin’s personal and corporate assets. Justice Ricchetti ultimately ordered that an investigative receiver would be required in order to present the outstanding financial disclosure to the Court.

Contact Shariff & Associates for Advice on Financial Disclosure Obligations During Divorce Proceedings

The family and divorce lawyers at Shariff & Associates focus exclusively on resolving family law matters by providing clients with customized solutions tailored to their unique circumstances. Our firm assists clients who are proceeding with a separation or divorce and are experiencing issues relating to family property and financial disputes. To arrange a consultation with a member of our family law team, please complete our online form or contact us at 905-591-4545.