Written on behalf of Shariff & Associates

In family law litigation, if one party has knowingly or recklessly made a false statement with knowledge of the falsehood, the statement may constitute fraud. Accordingly, a court may change an order that was obtained by fraud, however, in order to do so there is a high threshold to meet. A party’s belief that a litigant has deliberately misrepresented the facts is not sufficient.

High Threshold to Change an Existing Order Due to Fraud

Rule 25(19) of the Family Law Rules allows courts to change an order that was obtained by fraud. In Gray v. Gray, the Ontario Court of Appeal also determined that it includes authority for courts to set aside an order. In Hatuka v. Segal the respondent aimed to set aside an earlier order on the basis that there had been an act of fraud. She reviewed financial documents that the applicant had disclosed and suggested they contained proof that the applicant had a greater income in 2015 than he had disclosed. In her view, the applicant had not fully disclosed his income. The applicant disputed this, and suggested the claim reflected the respondent’s intransigence.

Justice McGee explained that setting aside an order for fraud under Rule 25(19) carries a high threshold. The party alleging fraud “must clearly prove that the other party knowingly or recklessly made a false statement with knowledge of the falsehood, and did so with wrongful intent”. In this case, the judge noted that income reported for tax purposes does not determine income for child and spousal support, and that some factors in determining “income for support purposes are discretionary”. Further, Rule 13 obligates parties to continually update their income. Consequently, for the judge, having a different finding on a different record could not form the basis of fraud. Although the judge warned that there may be situations where the evidence showed that a party “knowingly or recklessly asserted a false statement of income, or other false statements in a deliberate attempt to deceive” and gain an advantage, that was not the situation in this case. Accordingly, the respondent’s motion was dismissed.

A Party Must Knowingly or Recklessly Provide False Information

Prior cases have set out a number of factors for courts to consider when assessing a request to set aside an order on the basis of fraud, such as:

1. The fraud alleged must be proved on a reasonable balance of probability. The more serious the fraud, the more cogent the evidence required.
2. The fraud must be material, going to the foundation of the case.
3. The evidence of fraud must not have been known at the time of trial by the party seeking to rely on it.
4. If a party wishes to challenge a procedural irregularity in a court order or pleading, they should do so promptly.

In Wentworth v. Rogers, the court explained that central to a finding of fraud, the party asserting a judgement was procured by fraud must show “that there has been a new discovery of something material, in the sense that fresh facts have been found, which, by themselves or in combination with previously known facts, would provide a reason for setting aside the Judgment”. Additionally, as the judge noted in P.M. v. S.M., a party wishing to set aside a trial judgement should act promptly without delay, as they “should not be taking substantive steps in a case and waiting until a later time to proceed with the procedural challenge”.

Burden of Proof on Party Alleging Fraud

In Gupta v. Gupta the respondent father brought a motion to set aside, amend, or vary a final order pertaining to equalization and determination of income for spousal and child support purposes. He argued that the final order contained errors exceeding the amount of $500,000 that arose from the mother’s fraud and misrepresentation. According to the father, the mother presented the court with incorrect valuations of his assets and income. The judge explained that a party has the onus to prove the value of an asset or their income when it is in issue, and also the onus to prove the fraud when it is being alleged.

Here, the proceeding that led to the final order was uncontested as the father’s pleadings were struck and his participation in the trial was ended due to his violations of court orders. When it came to the first onus, the litigants had to have credible evidence relating to income or the value of assets. For the mother in an uncontested trial, Justice Trimble found that her obligation was to “put forward such relevant evidence that Father produced up to that point, as to his income and the value of the assets”. She had no obligation to test accuracy or reliability of that evidence, nor was she obliged to “unearth” other evidence that he did not disclose.

When it came to the father’s allegation of fraud pursuant to Rule 25(19), the onus is on the person alleging fraud to prove it. In Virc v. Blair, the Ontario Court of Appeal confirmed that the onus is not reversed and moved to the recipient spouse. The court stated that “in the face of a deliberate material misrepresentation, the onus is not appropriately placed on the recipient spouse. Rather, the burden is on the party disclosing to establish actual knowledge of the falsehood by the recipient”. There was no authority that the spouse receiving financial disclosure was obligated to investigate the information provided when there was deliberate and material non-disclosure by the other spouse. Leading up to the issuance of the final order, the father was found to have deliberately withheld disclosure that he had been ordered to provide. Consequently, any issue he hoped to raise regarding errors in the final order needed to be dealt with on an appeal. However, in this proceeding, he failed to meet the high standard that at the trial the “mother intentionally misled the court or made false statements indifferent to their truth”. Thus, there was no basis to his allegation of fraud.

Fraud Can Provide a Basis to Set Aside a Court Order

If a party knowingly makes false statements or asserts a false income in an attempt to deceive and gain an advantage in court, it may constitute fraud. This provides a basis for the other party to ask the court to change or set aside an order obtained by fraud. Parties should take exceptional care when disclosing financial information and ensure that they disclose all the relevant information so as to avoid accusations of fraud.

Contact the Lawyers at Shariff & Associates in Whitchurch-Stouffville for Assistance With Your Family Law Needs

At Shariff & Associates, our team of skilled family lawyers regularly help clients navigate the uncertainties and difficult terrain that can accompany family law disputes. Whether you are contemplating a separation, going through a divorce, or looking to resolve your issues through collaborative family law, we can provide you with valuable information tailored to your unique situation so that you can make informed decisions about your next steps. To speak with one of our lawyers regarding your family law needs and goals, contact us online or call us at 905-591-4545.