In a recent Ontario Court of Appeal case, the court discussed the tort of conspiracy in family law cases and also highlighted the issue of “invisible litigants” and their impact on such cases.

Wife Alleges Conspiracy in Divorce Case

The husband and wife cohabited for 17 years. They married on May 10, 1997, and separated on September 29, 2012. They have 15-year-old twins. 

The wife worked as a lawyer for nine years of the marriage. The husband is an entrepreneur who has been working in the casino and gaming industry for over 20 years; he incorporated a company, which holds real estate and gaming businesses. After the husband sold an on-line gaming platform for $11.5 million, the wife left her job as a lawyer to pursue a graduate legal education. 

By the time the couple separated, their wealth had been significantly depleted. 

The wife alleged six separate tortious conspiracies. 

Essentially, the wife alleged that the husband failed to disclose his income, which was compounded by a series of misleading or inaccurate disclosures by the husband, his father, and his company. She alleged that they had conspired to keep money out of the husband’s hands specifically for the purpose of reducing her family law entitlements.

While the husband claimed that, since separating from the wife, his yearly income was $120,000, the wife claimed that such an amount did not even cover the rent for his home. 

The judge also heard evidence that in 2018, the husband sent the wife an email claiming that he had not earned more than $115,000 per year since 2006. As the facts revealed, at that time he was actually earning $800,000 per year from a single management contract alone. As a result, the wife accused the husband and his father of jointly conspiring to shelter and conceal millions of dollars of the husband’s true income and assets from her, using various trust vehicles and corporate arrangements. She alleged that the intent behind this conspiracy was to deprive her and the children of their support entitlements.

The husband asserted that he did not conspire with any party to hide this income.

Lower Court Finds in Favour of Husband

The motion judge granted partial summary judgment against the wife, thus precluding her from having her conspiracy claims against the husband heard at trial.

The wife appealed.

Court of Appeal Reverses Lower Court Decision

The Court of Appeal allowed the appeal, finding that the motion judge had made several errors, including in her approach to the tort of conspiracy. The court stated:

“As the Supreme Court [of Canada] suggested in Leskun v. Leskun, […] nondisclosure is the cancer of family law. This is an apt metaphor. Nondisclosure metastasizes and impacts all participants in the family law process. Lawyers for recipients cannot adequately advise their clients, while lawyers for payors become unwitting participants in a fraud on the court. Judges cannot correctly guide the parties to a fair resolution at family law conferences and cannot make a proper decision at trial. Payees are forced to accept an arbitrary amount of support unilaterally determined by the payor. Children must make do with less. All this to avoid legal obligations, which have been calculated to be a fair quantification of the payor’s required financial contribution. In sum, nondisclosure is antithetical to the policy animating the family law regime and to the processes that have been carefully designed to achieve those policy goals.

There is a related malady that often works hand-in-hand with nondisclosure to deny justice in family law proceedings. The problem is what I will call “invisible litigants.” These are family members or friends of a family law litigant who insert themselves into the litigation process. They go beyond providing emotional support during a difficult time to become active participants in the litigation. Usually their intentions are good, and their interference makes no difference in the ultimate result. However, sometimes they introduce or reinforce a win-at-all-costs litigation mentality. These invisible litigants are willing to break both the spirit and letter of the family law legislation to achieve their desired result, including by facilitating the deliberate hiding of assets or income. 

If we were to accept the analysis of the motion judge, co-conspirators who engage in such behaviour could do so with impunity. Contrary to the observation of the motion judge, conspiracy is not a “blunt instrument” to respond to this misconduct. It is a valuable tool in the judicial toolbox to ensure fairness in the process and achieve justice. If the tort of conspiracy is not available, then co-conspirators have no skin in the game. Their participation in hiding income or assets is a no-risk proposition. If their conduct is exposed, all that happens is that the payor will be forced to pay what is appropriately owing. If there is to be deterrence, there must be consequences for co-conspirators who are prepared to facilitate nondisclosure.”

In allowing the appeal, the court set aside the order granting partial summary judgment, and ordered that the wife’s case proceed to trial.

Get Advice 

At Feigenbaum Law, our goal is to help you move forward following the breakdown of a relationship while retaining as much financial stability as possible and ensuring your children are provided for. Mark Feigenbaum is able to counsel his clients on all potential risks that may result from a family law dispute, not just those related strictly to the breakdown of a marriage. Contact Mark online or call him at (905) 695-1269 or toll-free at (877) 275-4792 to book a consultation.