Financial Disclosure is the Most Basic Obligation in Family Law
Written on behalf of Long Shariff & Associates
In a recent Ontario Court of Appeal Hevey v. Hevey, the Court overturned a motion judge’s decision to grant summary judgment and sent the matter back to be heard at trial. In doing so, the Court confirmed that the requirement to disclose financial information under the Family Law Rules also applies to summary judgement motions. The Court also confirmed that, under the Family Law Act, there is no requirement for “established fraud” in order for an extension to be granted for prescribed time to file for relief, including equalization.
Financial Misrepresentation in a Divorce Proceeding
The case concerns a spouse’s application for equalization and other relief following a recent discovery of significant financial misrepresentation by the other spouse at the time of the initial divorce proceedings. Ms. Lynne Hevey claimed that her spouse, Mr. Charles Hevey. had not disclosed nearly $21 million in assets at the time of their divorce, which included an interest in a complex trust. At the time of Ms. Hevey’s application, the former couple had been divorced for more than a decade. In response to Ms. Hevey’s application, Mr. Hevey brought a motion for summary judgement under r. 16 of the FLR, asking to have Ms. Hevey’s application dismissed on the basis that the limitation period set out in s. 7(3) of the FLA had already expired. Mr. Hevey further claimed that he and Ms. Hevey had agreed not to pursue equalization or spousal support at the time of their divorce.
The motions judge granted the summary judgement requested by Mr. Hevey stating that the claim for equalization was time-barred as there was no evidence of fraud or bad faith. The motions judge further stated that Mr. Hevey was not required to file an answer to Ms. Hevey’s application or file a financial statement as required by the FLR in order for the summary judgement to be granted.
In appealing the motion judge’s decision, the appellant, Ms. Hevey, argued that the motion judge erred in two matters. First, by allowing Mr. Hevey’s motion for summary judgment when Mr. Hevey had not served an answer to her application, nor filed any financial statements, as required by r. 16 of the FLR; and second, misinterpreting and misapplying s. 2(8) of the FLA.
Financial Disclosure is “the most basic obligation in family law”
The Ontario Court of Appeal agreed with the appellant and overturned the motion judge’s ruling. The Court found that the motion judge made a reversible error by permitting Mr. Hevey to proceed with his summary judgment motion despite not having filed an answer to Ms. Hevey’s application as required by r. 16 of the Family Law Rules. In addition, the Court found that the motion judge erred by misinterpreting and misapplying s. 2(8) of the Family Law Act, which sets out the conditions to be applied by the court in considering whether an extension of time prescribed by the Act should be granted.
In ruling on r.16 of the Family Law Rules, the Court confirmed “[t]he Family Law Rules was enacted to reflect the fact that litigation in family law matters is different from civil litigation…They embody a philosophy peculiar to a lawsuit that involves a family.” Part of that philosophy is the recognition that “[t]he most basic obligation in family law is the duty to disclose financial information.”
“Established fraud” is not a requirement for a limitation period extension to be granted
In ruling on s. 2(8) of the Family Law Act, the Court ruled that the standard of “established fraud” that the motion judge was holding the appellant to in order to revisit the question of the limitation period was higher than and inconsistent with the requirements of s. 2(8) of the Family Law Act. The Court confirmed that s. 2(8) allows for an extension of the prescribed time where there are: (1) apparent grounds for relief, (2) relief is unavailable because of delay that has been incurred in good faith, (3) and no person will suffer substantial prejudice by reason of delay. The Court found that all three grounds were present in the case.
The Court of Appeal also found that the motion judge erred in finding that because the appellant, Ms. Hevey, had “book-keeping experience and access to some (though not all) of the trust information, she understood the complexity and consequences of the corporate and trust arrangements.” Further, “given the absence of a clear written agreement between the parties,” the Court found that the facts may support “the inference that she did not understand the arrangements, whether as a result of a lack of disclosure, misrepresentation, or other factors”. There was also some question of discrepancy between the assets that the respondent, Mr. Hevey, listed as $0 on his net family property statement and the bank statement earlier in 2008, around the time of the couple’s divorce, that his net worth was $21 million.
The Court noted that “these determinations relate both to the explanation for Mr. Hevey’s delay and to her good faith and could not be made on a summary judgment motion, at least in the absence of an answer by the respondent, which undermined her ability to put her best foot forward.”
Based on the above, the Court of Appeal allowed the appeal and remitted the matter to trial, without prejudice to the right of the parties to bring a fresh motion for summary judgment in accordance with these reasons. The Court also ordered costs against the respondent to the appellant for this appeal in the amount of $15,000.
Contact Long Shariff & Associates in Stouffville for Child and Spousal Support Arrears or Variation Requests
The family lawyers at Long Shariff & Associates work with clients on a variety of variation applications, for applicants as well as respondents. We will review your situation and provide a realistic assessment of the likelihood of success with respect to the application. Whether requesting an application for relief or defending against one, we will advocate for the best possible outcome on your behalf. To review your matter with a member of our team, please reach out to us online, or call us at 905-591-4545.