“The Cancer of Family Law Litigation”: Failure to Disclose and its Consequences

Kasey Anderson

In 1994, the Honourable Mr. Justice Fraser of the Supreme Court of British Columbia wrote what is now an almost-famous phrase in family law: “Non‑disclosure of assets is the cancer of matrimonial property litigation.” This phrase was thereafter expanded by the Supreme Court of Canada in Leskun v Leskun, 2006 SCC 25 and more recently in Michel v Graydon, 2020 SCC 24 to “Failure to disclose material information is the cancer of family law litigation”.

Financial disclosure is central to a just determination of the issues of division of property and child and spousal support upon a separation or divorce. The Court has implemented strict guidelines surrounding what must be provided and under what timeline. Unfortunately, non-disclosure continues to plague the Courts and eat up valuable time and resources. At a certain point, the Court must make decisions in the absence of disclosure, which decisions often heavily penalize the party who failed or refused to disclose.

In Heuft v Bramwell, 2021 ABQB 642, the Honourable Mr. Justice M. J. Lema dealt with non-disclosure in the context of a child support application. Justice Lema noted that pursuant to the Alberta and Federal Child Support Guidelines, a payor may be imputed an income when they have failed to provide income information when under a legal obligation to do so. However, imputing an income requires “some evidence”, i.e., no arbitrary estimates.

In this case, the payor had provided “next to no information” as to his income for nearly 10 years, notwithstanding multiple requests and there was therefore “next-to-no evidentiary basis” on which an income could be imputed. Notwithstanding this difficulty, Justice Lema found a pathway to impute income based on the following principles:

1. In the absence of complete income tax returns and other financial information of a spouse the court must look to other evidence, including circumstantial evidence, for the purpose of imputing income (A.G. v. B.R., 2005 BCSC 96);
2. Circumstantial evidence which can be relied on includes bank account and credit card statements (HRMT v SNS, 2018 ABQB 843); Oral evidence (MacKenzie v MacKenzie, 2003 NSCA 120); Evidence as to the payor’s ability to obtain a mortgage (Poursadeghian v Hashemi-Dajah); and the payor’s resume (Graham v Bruto, 2008 ONCA 260); and
3. An adverse inference can be drawn against a non-disclosing party on a non-permanent basis allowing the non-disclosing party to complete their disclosure and have support reviewed.
   In the case before him, Justice Lema drew a provisional adverse inference against the payor and imputed him an income commensurate with child support of $800.00 per month, the amount requested by the recipient, with the onus on the payor to prove otherwise if he wished by providing full financial disclosure.