Judge appoints receiver to get to the bottom of husband’s property in divorce case

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Judicial intolerance on the rise for spouses who make incomplete financial disclosures in divorce cases

A separated spouse is unable to determine his or her eligibility for property division, child support, and spousal support without financial disclosure. A separated spouse is unable to determine his or her eligibility for property division, child support, and spousal support without financial disclosure. Photo by Getty Images/iStockphoto

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There is growing judicial intolerance for spouses providing incomplete financial disclosure in divorce cases, amid a growing backlog of cases that are placing significant demands on courts and judges across the country.

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Financial disclosure is an essential tenet of family law: without it, a estranged spouse is unable to determine their eligibility for property division, child support, and spousal support, and court proceedings can be unnecessarily lengthy. while those issues are resolved.

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That’s what happened in a recent case before Justice Leonard Richetti of the Superior Court of Justice in Ontario, in which the judge ultimately took the “extraordinary” step of appointing a receiver to provide disclosure relating to the husband’s assets and income.

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In this case, a husband and wife separated after 47 years of marriage at the age of 77 and 72 respectively. The couple amassed significant wealth through the land development business the husband started soon after the couple got married. According to the husband’s net worth statement, which she prepared seven months before their separation, she was worth around $78 million. Despite the husband’s own details about his wealth, after the separation of the parties she alleged that she had no net worth and was forced to stay in his office as he could not rent the house. .

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Unfortunately, the hallmark of the couple’s separation is the husband’s refusal to provide necessary and relevant financial disclosure to his ex-wife. The wife began court proceedings five days after the parties parted ways in November 2019. Since that time, there have been about 15 court hearings, almost all of which have focused on the husband’s incomplete disclosure. Several orders forced the spouse to provide, for example, real estate appraisals, corporate information, documents related to money given to family members, and information about a corporate reorganization.

The husband failed to comply with several court orders. In May 2022, the wife asked Justice Richetti to find the husband in contempt of six court orders. In a contempt hearing, the husband admitted his failure to comply and pointed the finger at others in defense of his violation. He said he was unable to comply with court orders as a result of “lack of financial resources, a lack of an adequate internal workforce to handle the financial disclosures demanded, and a lack of control over third parties who were requested to prepare the report.” “

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Justice Richetti rejected the husband’s suggestion that he should not be held guilty for incomplete disclosure, and noted that “the difficulty with outstanding disclosure is that it is all within the husband’s control – as he suggests in third party control.” gives.”

Against that background, Justice Richetti considered whether the husband was in contempt. They began their analysis by stating that “the case reflects an unfortunate waste of considerable judicial resources when the parties choose not to comply with their fundamental obligation on alienation – disclosure of complete, and accurate financial information and documentation. Party assets.” And the ‘hide-and-seek’ game of income should be discouraged in every possible way.”

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During the five-day hearing before the judge, the husband and wife gave evidence. The judge assessed the husband’s evidence and rejected it “outright”. According to Justice Richetti, the husband’s evidence constituted a “bald denial, implicit and explicit attempt to blame both his former counsel” and “was inconsistent and included unreliable explanations.”

According to Justice Richetti, contempt should be discovered “with restraint and as a last resort” only “in the most obvious of cases and with the greatest of caution”. For the judge, it was one of those cases. The judge found that the husband was in contempt of the disclosure orders because he “acted deliberately so as not to comply with the disclosure orders in order to avoid disclosing his personal and financial information.”

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On 5 August, nearly three months later, a hearing was held to determine the punishment for contempt. At that hearing, Justice Richetti first considered whether the husband had brought himself into compliance with the court’s orders. In other words, did the husband purge his contempt? Despite the opportunity to correct the ship, the husband did not do so and, not surprisingly, remained in contempt.

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In designing the punishment, the judge stated with regard to the goals of punishment for contempt that 1) prevention to prevent further non-compliance through awareness that “severe for willful and major disobedience of court orders” consequences and failing to make full and accurate financial disclosures” and 2) condemnation that “should help maintain confidence in the parties in family law proceedings and the general public exercising the justice system” by demonstrating that “justice Administration is seriously undermined where parties can disregard statutory obligations or court orders.”

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The judge ordered the husband to pay a fine of $50,000 to the wife. In doing so, Justice Richetti said the amount was “unacceptably low,” but he was unable to order a higher amount because the wife had requested only $50,000.

In a relatively rare move, the contempt penalty also included the appointment of a receiver. A receiver is a neutral and independent third party tasked with controlling all or part of the affairs of a person or business. In this case, the receiver shall be given all rights and entitlements that the spouse had to “receive, solicit and receive all relevant financial documents and information relating to the issues in this matter”. Simply put, the husband’s refusal to disclose is corrected by giving the power to someone else.

Justice Richetti held that “the appointment of a receiver is an extraordinary and intrusive measure.” However, in the circumstances of this case, the outcome is both proportionate and appropriate.

If the husband continues to thwart the disclosure process and the recipient’s deed, Justice Richetti’s decision leaves it open to the appointment of a receiver who will take full possession of all of the husband’s property and business interests.

Adam N. Black is a partner in the family law group at Torkin Mans LLP in Toronto.

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