Recent case: Disclosure obligations for executive employees
Ali v. Sayilgan 2022 ONSC 2051
In keeping with our theme of exploring financial disclosure obligations in family court proceedings, the following case comment provides a good overview of the proportionality of disclosure where one party works as an executive employee.
In this case, the respondent mother brought a motion for production from the applicant father to better assess his income for child support purposes. The mother also sought interim disbursements to be paid by the father under rule 24(18) of the Family Law Rules. The mother’s motion was brought within the context of the father’s application for more parenting time with their children.
In 2016, the parties had entered into a separation agreement which contemplated decision-making authority of their two children, parenting time and how child support was to be calculated. The father receives a base salary, bonuses and other forms of compensation through his employment at Manulife. His salary was approximately $300,000.00 a year when they separated. The father provided his T4 to the mother each year and adjusted his support payments accordingly. He also paid 100% of the children’s section 7 expenses.
The mother’s motion challenged the father’s financial disclosure claiming that the disclosure he provided was insufficient and that he did not fully disclose his income. The father sought to have the mother’s motion dismissed and to address the issue of costs from a prior contested adjournment.
Justice Sharma reviewed all the previous orders and endorsements including the multiple disclosure requests and the disclosure provided. Despite the productions previously provided to the mother, the mother continued to insist that there were stock awards or stock bonuses that the father received that were not reported in his T4 income.
In determining whether the mother’s requests were reasonable, Justice Sharma reviewed what the parties’ legal obligations were in claims involving child support. Justice Sharma states “a party is required to serve and file a financial statement (Form 13) along with income and financial information referred to in s. 21(1) of the Federal Child Support Guidelines and Rules 13(1) and (3.1) of the Family Law Rules” (para. 24).
In Justice Sharma’s perspective, the only issue in the case was whether the father failed to disclose income from “any other source” other than what was reported on his T4. In arriving at his decision, Justice Sharma reiterates that:
- Caselaw makes it clear that financial disclosure is of utmost importance in family court proceedings;
- After full and comprehensive financial disclosure has occurred, the “principle of proportionality” which is fundamental to family law must be engaged to “prevent endless disclosure requests and discourage fishing expeditions, with regard to the importance and complexity of the issues in a case” (para. 27).
In this case, Justice Sharma was satisfied that the father met his obligation of producing all relevant income information to the mother. The father demonstrated this by:
- Providing his T4, tax returns and notice of assessments as required under s. 21(1) of the Child Support Guidelines (para. 28);
- Providing a signed offer of employment and year-end pay stubs for the past 5 years (para. 29);
- Providing booklets from Manulife describing the compensation structure, employee benefits and defined contribution plans, as well as explaining how the incentive plans work and when they are paid out (para. 29);
- Providing an affidavit and a report provided by a financial specialist in divorce accounting who provided an opinion about the father’s income for support purposes.
Justice Sharma declined to order production of the items set out in the mother’s notice of motion, explaining that the obligation under s. 21(1) of the Guidelines is to disclosure all sources of income, not assets which are relevant for a determination of equalization (para. 36). Equalization was not an issue in this case as the father paid for 100% of the children’s s. 7 expenses. Justice Sharma was of the view that the mother was unable to demonstrate why any of the information she requested was relevant for determining income.
The father was able to demonstrate that he cooperated with the mother’s multiple disclosure requests and, ultimately, costs were awarded against her for being unreasonable and behaving contrary to the primary objective of the Family Law Rules.