What Happens When A Party Fails to Disclose Family Property?

In Alberta, parties are generally expected to equally divide their property upon divorce unless exceptional circumstances justify an unequal division. This is the case even if the property or asset is only in one of the party’s names. For a decision-maker to determine property division issues, whether through alternative dispute resolution measures or court, full and accurate information about all of the property is required. Therefore, each party to a family law proceeding must provide complete disclosure of their property and assets. However, this can be challenging if much of the property or assets is held solely in one of the party’s names. This can make obtaining information about this property or asset difficult for the other party. They will need to rely on the other party to provide full disclosure. 

This post will discuss parties’ disclosure obligations to a family law proceeding, focusing on property and asset disclosure. We will discuss what sorts of disclosure are expected from the parties. This post will be a helpful resource for parties seeking to understand their disclosure obligations. Also, we provide helpful insights for situations where one party may not be cooperative in providing disclosure. As we will discuss in the case Bentley v. Bentley, 2017 ABQB 53, the court will consider all the evidence. It can include a value for undisclosed assets when determining property division, even if there is a lack of disclosure. 

What are the disclosure obligations for parties to a family law proceeding?

To fulfill one’s disclosure obligations in one’s family law proceeding, it is essential for parties to understand what kinds of disclosure they must provide. Parties to a family law proceeding are held to a high standard for disclosure. There can be significant negative consequences if a party fails to disclose properly. 

Disclosure of property required by Alberta Family Property Act 

Parties are required to disclose all property that they own. According to s. 31 of the Alberta Family Property Act, parties must provide a sworn statement of all the property they own, including property located outside of Alberta. The statement must include the particulars of all property the party owns and will be filed with the court. This requirement applies to married parties and those in an adult interdependent relationship (i.e., a common-law relationship). 

There are several categories set out in the sworn statement for property disclosure. 

1. Real Estate – Parties need to disclose any interest in land, including leasehold interests and mortgages, even if they are not the registered owner. Parties must provide legal descriptions of the properties and an estimated market value, not including any encumbrances, which would be listed under debts.
   
2. Vehicles – Parties must disclose any interests in cars, trucks, motorcycles, trailers, boats, etc.
   
3. Financial Assets – Parties must list their savings and chequing accounts, cash, term deposits, GICs, stocks, bonds, mutual funds, insurance policies, accounts receivable, securities, etc. For insurance policies, parties must include the beneficiaries.
   
4. Pensions and RRSPs – Parties must disclose the institution holding their accounts and pension details.
   
5. Corporate/Business Interests and Trust Interests – Parties must disclose any direct or indirect interest in any corporation, unincorporated business, partnership, trust, joint venture, etc.
   
6. Other – Finally, parties must disclose any assets they own that are of value, such as money owed to that party, precious metals, art, jewelry, household items of high value, etc.

As outlined above, parties must provide a detailed account of each category that applies to their circumstance. For each property or asset listed above, the party must provide the name of the interest, the location, the date it was acquired, the purchase price, and its current market value, which can be an estimate for this form. Updated information about the property may be required, especially if there have been significant changes to the value by the time of trial. 

The statement would also identify property or assets to which a party claims an exemption. 

What if a party is not cooperative in providing disclosure about their property and assets?

If a party does not cooperate in providing disclosure about their property, the court can draw an adverse inference against that party. One of the consequences that can occur is for the court to include the value of the undisclosed property in the overall property value to be divided. However, it is often difficult for the court to determine what amount should be included. Understandably, determining this information is difficult for a party if the other party fails to fulfill their disclosure obligations. In some cases, as in the Bentley case below, the court may have enough information to include an estimate of the undisclosed asset in the property division. 

Court includes value of undisclosed bank account in family property division

In the Bentley case, the parties married in 1996 and separated in 2013. By the time of trial, the parties shared custody of their three children, aged 12 to 17. 

In the case, the husband claimed that he only had one checking account, which was disclosed on his sworn property statement. He also claimed that he previously held a second chequing account that was closed in 2014. In the statements of his disclosed account from 2015 to 2016, there were monthly branch-to-branch transfers to his disclosed account. The deposits totaled almost $23,000. The husband also did not explain the source of the funds, and the wife claimed that the money came from his undisclosed account. 

The husband claimed that the funds may have come from his previous employer, as he was promised shares in the company. However, he could not confirm on cross-examination whether he received funds from his previous employer after his last pay stub. 

The court concluded that the husband could not explain or provide evidence of the source of the deposits, which suggested that he had an undisclosed account. Due to the husband’s lack of disclosure, the court attributed the transferred amount of approximately $23,000 to the family property to be divided. 

Due to his lack of disclosure and evasiveness during cross-examination regarding his assets, the court also found that he did not provide sufficient proof of his credit card debt, as no statements were provided, and he only gave the court an estimate without supporting documents. 

The Calgary Family Lawyers at Mincher Koeman Can Assist with Your Disclosure Obligations

Parties to a family law proceeding must make full and accurate ongoing disclosure. There can be significant consequences for failing to comply with disclosure obligations, so it is important to understand them from the outset. If you are seeking outstanding financial disclosure or require assistance with your disclosure obligations, you should speak with one of our family law lawyers at Mincher Koeman, who are experienced in assisting business professionals and entrepreneurs with disclosure issues in family law proceedings. Our Calgary family law lawyers are dedicated to finding the best resolution for you after your divorce.

To book a consultation, please get in touch with us online or by phone at 403-910-3000.