Courts are clear that providing complete financial disclosure is an essential element of family law proceedings and is a basic obligation of the parties. Failing to meet this obligation causes harm, including disadvantaging the other party and causing delay. When faced with breaches of the disclosure obligation, courts have tools, such as striking pleadings, to address disclosure failures and ensure the litigation is fair to both parties. These cases can raise questions about whether this is a reasonable response that balances fairness to both parties.

Appellant Failed to Make Complete Financial Disclosure 

In Riley v. Riley, the parties had been married for 20 years. After separating, the appellant commenced an application seeking an equalization payment. Orders for disclosure were made in 2016 and 2018, but after nine years, the claim remained unresolved. The judge determined that the appellant had not complied with the court-ordered disclosure, that the noncompliance was egregious, and that it would be unfair for the respondent to have to defend against the equalization claim without the appellant providing the ordered disclosure. The judge proceeded to make an order striking the appellant’s application under Rule 1(8) of the Family Law Rules.  

On appeal, the appellant argued that the judge erred in exercising her discretion to strike his application. He claimed that the judge failed to consider that the documents he failed to disclose were irrelevant, that she overlooked the disclosure he did make, and that she failed to consider other alternatives to striking his application. The main issues contested in the equalization claim centred on the value of each party’s assets. The appellant claimed to have no assets apart from amounts in bank accounts totalling just over $69,000. But the respondent contested that, and claimed that he also had an interest in two businesses that existed at the date of separation. She claimed she required a forensic accounting of the appellant’s assets.

Throughout the litigation, the judge made several orders for disclosure. The judge found that the respondent complied with her obligations but identified 28 deficiencies with the appellant’s disclosure. 

Judge Strikes Appellant’s Application Due to His Breach of the Court Order  

Rule 1(8) of the Family Law Rules deals with the failure of a party to obey a court order. It provides that “the court may deal with the failure by making any order that it considers necessary for a just determination of the matter,” which includes, amongst others, an order for costs, an order dismissing a claim, or an order that the party is not entitled to any further order from the court.

Here, the appellant did not argue that the judge lacked authority to make the order that she did. Instead, he argued that the judge erred by exercising her jurisdiction to use her power and make the order. He pointed to the primary objective of the Family Law Rules: “to enable the court to deal with cases justly”. Moreover, Rule 2(3) clarifies that dealing with cases justly includes: 

• Ensuring a procedure that is fair to all parties;
• Saving expense and time;
• Dealing with the case in ways that are appropriate to its importance and complexity; and 
• Giving appropriate court resources to the case while taking account of the need to give resources to other cases.

The appellant pointed out that at the valuation date, the respondent had assets of several million dollars, while his assets were negligible. He claimed that the effect of the order was to deny him the right to pursue equalization, which amounted to an unjust result. 

Financial Disclosure Is the “Most Basic Obligation in Family Law”

For the Court of Appeal, the problem with the appellant’s claim was that it overlooked his own failures. In Roberts v. Roberts, the Court emphasized that “the most basic obligation in family law is the duty to disclose financial information”. The Court explained that delays in cases impede progress, disadvantage the opposing party, and also affect the administration of justice. In this instance, this was the obligation that the appellant breached. This breach directly raised the issue of justly handling cases, since the respondent required disclosure to defend against the appellant’s claims about his assets. The judge originally concluded that it would be unfair for the respondent to face an equalization claim without the financial disclosure. 

Appellant Argues Decision Denies Him the Right to Equalization 

When a party fails to abide by a court order, Rule 1(8) provides clear direction on the types of remedies available to a judge, which includes striking pleadings. The courts have already explained that, in appropriate cases, striking pleadings is consistent with the primary objective of dealing with cases justly.

In Mullin v. Sherlock, the Court of Appeal outlined a framework for applying Rule 1(8) to cases of inadequate disclosure. First, judges must determine if there has been non-compliance with a court order. Then, in assessing the appropriate remedy, judges should consider a number of factors: 

• The relevance of the non-disclosure and its significance in hindering the resolution of issues;
• The context and complexity of the issues in dispute;
• The extensiveness of existing disclosure;
• The seriousness of efforts made to disclose; 
• The explanations offered by a defaulting party for the inadequate or non-disclosure; and
• Any other relevant factors. 

After considering these factors, the judge can determine the best remedy. The Court in Mullin also noted that the options in 1(8) are not exclusive and that other approaches may be appropriate. 

Judge Assessed the Relevance of the Non-Disclosure 

The appellant claimed that the judge’s approach was inconsistent with the framework in Mullin because she failed to focus on the relevance of the undisclosed material, or to acknowledge the significance of material that had been disclosed, or to consider an alternate remedy.

The Court disagreed. First, it was evident that the judge did consider the relevance of the non-disclosure. The judge concluded that, since the appellant did not provide bank account statements or documents about the business in which he was alleged to have an interest, it was impossible to properly assess his equalization claim. This was an assessment of relevance. The appellant suggested that some of the documents he failed to produce related to the period after separation or could only be of limited relevance. But the Court did not accept that, noting that the judge made the disclosure orders, had managed the case for years, and was familiar with the issues in the litigation.

The judge also found the failure to make disclosure was egregious and demonstrated an intention not to assist the court in reaching a just resolution. For the Court, this undermined any notion that the disclosure was minimally relevant to the dispute. 

Holistic Assessment Necessary When Considering Non-Disclosure

In assessing the material that the appellant did disclose, the Court explained the framework does not suggest there is “a level of disclosure beyond which breaches of further disclosure obligations are to go without a remedy”. Instead, it is necessary to make a holistic assessment, which is what the judge did. Despite the documents produced, the remaining nondisclosure directly affected the respondent’s ability to defend the equalization claim.

Lastly, the appellant alleged the judge did not consider other, less dramatic remedies. But as the Court pointed out, any alternative still needed to address the prejudice flowing from the non-disclosure. However, the appellant did not propose any alternatives, and merely suggesting the matter should proceed was not an alternative remedy. Overall, the judge exercised her discretion and made the order based on her assessment. The Court found there were no grounds to intervene, and the appeal was dismissed.

Contact NULaw in Toronto for Property Division Advice in Ontario Family Law Disputes

Financial disclosure is a critical part of family law proceedings, particularly in equalization and property division disputes. When a spouse fails to provide complete financial disclosure, the consequences can affect timelines, litigation costs, and the ability of the other party to properly respond.

For individuals navigating separation, divorce, equalization claims, or disclosure disputes in Toronto, the GTA, and across Ontario, NULaw can help clarify procedural obligations, available remedies, and next steps. Contact our team by calling 416-481-5604 or reach out online to discuss your family law matter.