If a spouse is claiming child or spousal support following the breakdown of a relationship, or if there is property to be divided, then you must both disclose your financial assets and debts. A party who fails to disclose assets or liabilities can be penalized, and could even be found guilty of a criminal offence.
Full and frank financial disclosure
The disclosure must be full and frank, meaning you must provide information about all of your assets and liabilities, whether they are located in Canada or elsewhere in the world, and regardless of when or how you acquired them. The obligation can also extend to assets and liabilities that are held by third parties on your behalf.
What would motivate someone to hide their assets or liabilities? Resentment, fear and anger are common reasons. One spouse may feel that the other doesn’t deserve to share assets, particularly if the other spouse is perceived as having caused the breakdown of the relationship. Lack of understanding about the law can also result in a failure to disclose, particularly if the assets were acquired prior the relationship, or were acquired by a spouse during the relationship using gifted funds. A spouse may also be reluctant to provide information regarding assets or liabilities if they were acquired illegally, or if the other spouse was not aware of the existence of the assets/liabilities during the relationship.
A failure to disclose may take many forms. For instance, a party may simply fail to acknowledge the existence of an asset/liability in his or her name, may transfer assets into someone else’s name, or may transfer assets to a jurisdiction that is outside of our court’s reach.
Whatever the circumstances, a failure to disclose assets/liabilities is a serious breach of the Rules of Court and may result in a party committing the criminal offence of perjury. A party who fails to disclose assets/liabilities risks being ordered to pay their former spouse’s legal fees, may receive a smaller portion of the assets or a larger portion of the family debt, and may ultimately be found guilty of a criminal offence. In short, the consequences of failing to disclose assets/liabilities can be severe.
On a more practical level, failure to disclose assets and liabilities can increase legal expenses, undermine the effectiveness of a settlement or a court order, and cost the parties to a family law action untold grief and additional expense. To quote the Honourable Mr. Justice Fraser of our B.C. Supreme Court, the non-disclosure of assets is “the cancer of matrimonial property litigation”.
Speak to a family lawyer
If you are concerned that your spouse has failed to disclose assets or liabilities in an attempt to skew the division of assets/liabilities or to minimize his/her obligation to provide support, your first port of call should be a family lawyer. There are a number of tools that can help to uncover or trace hidden assets/liabilities in a family law proceeding, and an experienced family lawyer will be able to recommend how best to tackle the problem. This might include:
- Requiring the former spouse to provide a sworn financial statement, and seeking a court order to compel compliance with this requirement if the former spouse fails to provide the sworn statement in a timely manner;
- obtaining copies of your former spouse’s financial records covering an appropriate time frame
- conducting an examination for discovery, at which your former spouse is questioned under oath
- requiring your former spouse to provide written answers, under oath, to a series of questions (known as interrogatories)
- providing your former spouse with a notice to admit, in which he/she is asked to admit the truth of certain stated facts
- retaining an expert, such as a forensic accountant, to examine the former spouse’s financial records, assets and liabilities to assess whether they are complete and accurate
While you might be tempted to conduct your own investigation either before, or instead of, speaking to a lawyer, you must do so with caution; your former spouse has certain privacy rights that you would not do well to breach, and it is therefore best to get legal advice before taking any action.
Contact us now
Whether you are contemplating a separation or you have already separated, getting legal advice from an experienced family will help you to manage the road ahead in a more efficient and cost-effective manner. Contact our family lawyers at North Shore Law LLP. We are here to help.