During a divorce, each party must provide proper financial disclosure for several key issues, including property division and the determination of child support and spousal support. Each party is required to provide full and complete financial disclosure, and the courts do not take this obligation lightly. Significant consequences can exist if a party does not provide full and accurate financial disclosure. The court can make adverse inferences against a party who has not provided full financial disclosure, including denying an application to reduce child support based on a decreased income, as was the case in Peters v. Atchooay, 2022 ABCA 347.
This article will discuss a party’s disclosure obligations in family law proceedings. The purpose of this is to guide you through the requirements based on legislation and case law. We will also examine the Peters v. Atchooay case as an example of the consequences that can arise if one does not fulfill their duty to make full financial disclosure. Finally, we will provide key takeaways for parties seeking to understand their disclosure obligations in family proceedings to avoid adverse consequences arising from a lack of disclosure.
Many disclosure obligations exist within the family law regime in Alberta, which is captured in various forms of legislation and case law.
Under s. 7.4 of the Divorce Act, parties to a family law proceeding must provide complete, accurate, and up-to-date information. This positively obliges parties to provide full and accurate financial disclosure. In other words, it is each party’s responsibility to actively take steps towards providing their disclosure.
The Family Law Act partly covers the family law regime in Alberta. Section 65(1) of the Family Law Act describes parties’ disclosure obligations to a family law proceeding.
First of all, parties are required to provide financial information for the determination of support upon request. If a party fails to fulfill their disclosure or adequately respond to the request, the court can make a series of escalating orders to address non-disclosure.
If the court finds that a party has not complied with a valid request for financial information, then the court can do the following:
If the party continues not to provide sufficient financial disclosure, the court can take further steps, such as one or more of the following:
These rules also apply for ongoing disclosure, as one’s income may change over time.
For support, the Federal Child Support Guidelines at s. 19(1) also requires a party to provide complete disclosure throughout.
According to the Alberta Family Property Act, parties must disclose the property they own fully. Section 31 of the Family Property Act requires parties to provide a sworn statement of all property they own, whether in Alberta or elsewhere.
The case law provides more details on disclosure obligations.
Especially for child support, the payor parent has a duty to provide full disclosure to determine their income. This obligation arises when the case begins and continues to be ongoing.
In some child support cases, a payor parent may seek to reduce their child support obligations after their income has decreased. However, if that party has yet to provide full and timely financial disclosure, they can be denied a reduction in child support. The court has noted that a party who has yet to provide full and timely financial disclosure cannot simply demonstrate a change in circumstances to lower child support when they finally provide adequate disclosure.
In the Peters case, the payor parent sought a retroactive reduction in his child support payments due to a decreased income.
The parties in this case were in a common law relationship from 2007 to 2013. They had two children together, and during the relationship, the mother stayed home to care for the children and household.
In 2014, an application was heard to determine the payor’s income. The only financial information was his 2012 tax return, which specified that he was earning $112,000. The court estimated his income based on this limited financial information.
From 2014 to 2020, neither party had exchanged financial information with each other, and the payor’s arrears rose to over $124,000. During this time, the only voluntary payments by the payor were $1,250, and the Maintenance Enforcement Program collected an additional $22,000 through enforcement proceedings and garnishing orders.
Later in May 2020, the payor’s counsel advised the recipient’s parent that he would bring an application to recalculate his child support arrears. While the payor claimed that he had provided his tax returns from 2014 to 2018 earlier in 2020, the recipient’s parent claimed that his tax returns were not provided until late in November 2020 after they were requested by her notice to disclose. According to the tax returns, his income from 2015 to 2020 was significantly less than in 2012. His income from 2014 to 2020 ranged from no income to $76,000. In 2020, he reportedly made over $19,000 annually.
The judge retroactively reduced the payor parent’s child support payments at the lower court level. While the lower court judge found that the payor did not provide any financial disclosure from 2014 to 2020, the court still decided that he had established a material change of circumstances, as his income was significantly reduced from 2014 to 2020.
The recipient’s parent appealed the decision.
The Court of Appeal found that the payor’s lack of financial disclosure was a key factor in determining retroactive child support. The Court of Appeal found that the trial judge did not have the recent decision, Colucci v. Colucci, 2021 SCC 24, before them at the time, as it was decided and reported shortly after. Based on Colucci, the Court of Appeal considered that the payor had not provided any financial disclosure over the past six years, which was a key part of the analysis. The court found that the payor could not fail his duty to disclose and then seek to rely on his late disclosure to benefit himself (i.e. through a reduction in child support arrears). The court refused to decrease the payor’s significant child support arrears retroactively.
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. Suppose you seek outstanding financial disclosure or require assistance with your disclosure obligations. In that case, you should speak with one of our family law lawyers at Mincher Koeman, who are experienced in assisting parties with disclosure issues in family law proceedings. Our Calgary family law lawyers are dedicated to finding the best resolution for you after your divorce.
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