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By Paul Russell, LegalMatters Staff • Failing to make full financial disclosure in the context of family law needlessly prolongs the process and results in greater costs, yet that failure happens all the time, says Toronto lawyer Gene C. Colman.
“Disclosure should be full, detailed and timely. A partial effort will just not hold up,” says Colman, principal of the Gene C. Colman Family Law Centre.
“I have significant problems with my own clients when it comes to this issue,” he explains. “Many do not take the requirement seriously, and now that people are stressed out about COVID-19, the problem has become worse.”
To help people understand why full disclosure is necessary, Colman recently held a “lively” webinar where he and another guest panellist addressed various issues.
Hidden ‘ouch’ factor
“Failure to properly disclose just draws out the litigation process and increases your legal costs,” he says in the webinar. “There is also a hidden ‘ouch’ factor, as a failure to properly disclose can potentially undermine any settlement, and an unfair settlement can ultimately be set aside.”
Colman tells LegalMattersCanada.ca the steps involved in achieving complete financial disclosure are not that onerous.
“The Family Law Rules require people to file income tax returns and notices of assessment from the last three years, and recent pay statements that show year-to-date totals,” he says. “It is not a huge requirement, it’s not rocket science and it’s not personal. It is just what the rules require.”
Anyone can create a My Account on the Canadian Revenue Agency website where past returns and notices of assessments are available, Colman says.
“In this electronic age, you can get everything you need with a few clicks of the mouse,” he says.
Colman says the need for full and frank financial disclosure was echoed by the Ontario Court of Appeal in a 2005 case.
‘Fact-finding is not to be a battleground’
“The new approach to fact-finding under the Family Law Rules has been to make disclosure a given. Fact-finding is not to be a battleground,” the judgment reads. “There ought to be an orderly, prompt request for disclosure with an organized speedy reply. The process is not to go on forever and the case is to move on because the facts point to a resolution or to the necessity of a trial. Obtaining the factual evidence is no longer a game of hide and seek.”
Court documents note the penalty for failing to comply with a disclosure order is severe.
“A litigant may find his or her pleadings struck and the case proceeding without his or her participation. The severity of the sanctions serves to emphasize the importance of disclosing the necessary information in a file quickly,” the judgment reads.
During Colman’s webinar, he cites a 2018 case where the judge ruled there was a deliberate attempt by the husband to frustrate his wife’s effort to determine spousal support and equalization.
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Referencing a 2015 decision, the judge wrote: “The most basic obligation in family law is the duty to disclose financial information. This requirement is immediate and ongoing. Failure to abide by this fundamental principle impedes the progress of the action, causes delay and generally acts to the disadvantage of the opposite party. It also impacts the administration of justice. Unnecessary judicial time is spent and the final adjudication is stalled.”
The obligation to remain transparent is ongoing through the family law proceedings, Colman says, explaining people must disclose new and updated information at every stage of the litigation process.
Those looking for assistance in completing financial disclosure can rely on websites such as divorcemate.com, he says, which offers a free annotated financial statement
Another option is Disclosureclinic.ca, where Shmuel Stern – who was a panellist on the webinar – offers guides to completing financial statements and organizing proper legal disclosure.
‘Don’t make us chase you’
“Go online and fill out your financial statement the best you can,” Colman says. “Forward to us your bank statements. There are plenty of resources out there that won’t cost you a dime. Don’t make us chase you – that will cost you extra money.”
Detailed information about various aspects of disclosure is available in a blog post on his website.
“The lawyers for the two sides in a separation can’t sit down to talk until the financial statements are completed,” Colman says. “If everyone does what they are supposed to do, we can make great headway in resolving the financial issues. So please, take disclosure seriously, save your money and help us wrap up your case.”
He invites anyone to view his past webinars on parental alienation, equal shared parenting, fathers’ rights and COVID-19. His last webinar in the series will be on July 16, titled “Grandparent Alienation: How do we address it?” Register for that webinar here, with links to PowerPoints and speaking notes for the other webinars available on the firm’s events page.
