The Problem

It is impossible to reach a fair and reasonable settlement of a family law matter without adequate disclosure. Both Statutes and Rules required disclosure, but these are too often ignored to the detriment of the weaker party and children.

The insidious nature of non-disclosure was characterized by Justice Fraser in Cunha v. Cunha, 1994 CanLII 3195 (BC SC). He wrote, “Non‑disclosure of assets is the cancer of matrimonial property litigation.”

He continues, “It discourages settlement or promotes settlements which are inadequate. It increases the time and expense of litigation. The prolonged stress of unnecessary battle may lead weary and drained women simply to give up and walk away with only a share of the assets they know about, taking with them the bitter aftertaste of a reasonably‑based suspicion that justice was not done. Non‑disclosure also has a tendency to deprive children of proper support.”

The injustice wrought by non-disclosure goes beyond individual cases. Justice Fraser continues, “Not only is it a matter of doing justice in any particular case, it is also a matter of general interest.”

What should lawyers do to fix the problem?

First, lawyers should ensure their clients understand and comply with disclosure rules.

Lawyers are not mouthpieces for their clients. While they hold professional obligations to their clients, they also hold obligations to the courts, justice, and the greater community. Neglecting these obligations can lead to reputational damage and professional misconduct issues.

Lawyers should ensure proper F8 Financial Statements, are prepared fully and accurately. Where required documents are not included, they should provide an explanation for the deficit.

Failure to fully disclose can result in a negative inference against your client. They can also adversely effect costs.

Special attention should be given to the provisions of the F8 that require business owners to attach:

(ii)a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom the corporation and every related corporation does not deal at arm’s length. (Rules of Court Rule 5-1(1):

This requirement is often missed. However, it is essential in determining what expenses paid by a business should be factored back into the party’s income. (FCSG 18(2))

A lawyer should exercise due diligence when taking instructions and obtaining information. It is critical not to swear F8s or affidavits that are misleading or patently untrue. You must review all of the information with your client to ensure that they affirm all of the statements being made.

The professional misconduct records are replete with examples of where lawyers “knew or should have known” that information they are putting before the court is inaccurate, misleading, or untrue. Relying on your client’s assertion of truth does not negate the need for due diligence.

The obligation to provide disclo-sure is ongoing. If opposing counsel requests information, counsel has an obligation to obtain and disclose this information in a timely fashion. Lawyers often get into trouble by failing to respond to such enquiries. This can be sharp practice especially if the lawyer knows, or ought to know, that this inaction will frustrate disclosure.

Lawyers often get into difficulty when they are asked questions by the Court similar to those asked by opposing counsel. Being asked by the opposing counsel puts the lawyer on notice. If counsel has failed to exercise due diligence, they will be unable to answer the Court’s question. Lawyers have to be very careful not to guess or make misleading representations.

Lawyers should ensure their clients understand court orders and comply with any disclosure requirements. Failure to comply may result in your client being held in contempt.

Conclusion

Even in an adversarial system, lawyers play a crucial role in ensuring fairness. Disclosure is an obligation that lawyers are professionally required to facilitate.

If your client refuses to take your advice and evade disclosure, be especially careful that you do not participate in this injustice.