Financial Disclosure in Family Law

In any case dealing with child support, spousal support or the division of matrimonial property, the first step for the parties to take is to exchange financial disclosure. This is a daunting and uncomfortable task for many individuals, as they are required to share their income tax returns, pay stubs, financial statements, bank account statements, credit card statements, and more with their former spouse and their lawyers. However, the exchange of financial disclosure in family law is an essential requirement for the proceedings. It ensures fair bargaining in settlement discussions, and it allows for the proper determination of support and the distribution of martial assets and debts.

A recent case of the Provincial Court of Alberta demonstrates the potential consequences of failing to provide adequate disclosure.  In Skoronski v Hagel, 2017 ABPC 153, the applicant mother had sought disclosure from the respondent father regarding whether the father was the beneficiary of his family’s trust.  The father continually refused to provide any information about the trust, claiming that he was not a beneficiary of the family trust, that he had no control over the trust, and that he was not even aware that a family trust existed until he was examined by the mother’s counsel.  The father’s counsel, who advised that he had the opportunity to fully review the family’s trust agreement, represented to the court that the father had no control over the trust and that there was nothing of significance in the trust agreement. The father’s counsel even swore an affidavit stating that the father was not aware of the trust’s existence until he was questioned by the mother’s counsel.

The father’s counsel suggested that if the mother wanted to know more information about the trust, she would have to bring an application against father’s mother, the paternal grandmother, who did have control over the trust.  When this application was heard, the paternal grandmother revealed that the father was both a beneficiary and a trustee of the family trust.  The trust agreement was ordered to be disclosed, which further revealed that the father had signed the trust agreement as a trustee in 2009. When these facts came out, the father maintained his claim that he did not know of the trust’s existence until he was questioned.  The father’s counsel claimed that he was unaware of the contents of the trust agreement as he did not review the trust agreement.  The Court concluded that the conduct of the father and his counsel warranted a costs award on a full indemnity basis, payable 50/50 by the father and his counsel.  In other words, as a result of the father and his counsel’s deliberate actions to prevent the mother from receiving disclosure she was entitled to, the father and his counsel were required to pay 100% of the mother’s legal fees that were incurred to seek such disclosure.

This case serves as a cautionary tale to parties and their lawyers in family law proceedings. Read the full case here.