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When requesting financial disclosure, keep relevance and proportionality in mind

• by David Frenkel

Originally published in the OFLM 2024-04 edition

Overview

The case of Van Veen v. Van Veen (2024 ONSC 743) reviews important family law principles of relevance and proportionality relating to financial disclosure. It also provides examples of specific requests and the reasoning the court used to either rule in favour of the claims or dismiss them.This article highlights the key take aways from the Van Veen decision and reviews related case law and principles on the topic.

Introduction

There are two competing themes in family law when dealing with disclosure issues: (1) full and frank disclosure, and (2) relevance and proportionality.

On the one hand, lawyers are expected to advise clients that as per the Family Law Rules they need to produce full and frank disclosure when the opposing party makes their requests.

On the other hand, as pointed out in McDowell v. McDowell (2021 ONSC 1954) there is also an element of proportionality, common sense and fairness built into the rules themselves so that the evidence can “contribute to the fact-finding process”.

In McDowell, Justice Price reminds us that excessive disclosure can be as harmful as non-disclosure. “It can confuse, mislead or distract the trier of fact's attention from the main issues and unduly occupy the trier of fact's time and ultimately impair a fair trial.”

Price J. clarified two important points:

  1. Proportionate disclosure is what falls between the two extremes of inadequate disclosure and excess demands for disclosure.
  2. The facts in each case will dictate whether disclosure requests fall within the scope of proportionality.

Moreover, the failure to apply the principle of proportionality impedes the progress of the proceeding, causes delay, and generally acts to the disadvantage of the opposite party. It also impacts the administration of justice, as unnecessary judicial time is spent, and the final adjudication is stalled. (McDowell at para. 37 with reference to Roberts v. Roberts, 2015 ONCA 450)

Lawyers are therefore encouraged to review and reflect on the general principles of proportionality and relevance when they make disclosure requests and also when they respond to them.

However, it is often not straightforward to apply general principles to the specific requests themselves.For example, is asking for five years of bank statements prior to the date of separation enough or too much? What about dealing with a self-employed client: how many years of past invoices relating to their business is considered excessive?

The above questions are not easy to answer, hence the reason that motions are regularly brought to seek judicial intervention.  

Therefore, a good first step in becoming more comfortable in advising clients on these issues is reviewing case law that deal with various types of disclosure requests. Such cases generally provide the legal basis that judges use to grant or dismiss the requests. And the more one reviews such reported decisions, the clearer those legal principles will be.

The following article reviews the recent decision of Van Veen v. Van Veen (2024 ONSC 743). Van Veen carefully assesses specific disclosure requests and summarizes the general principles that should be useful for counsel in their own cases.

Van Veen v. Van Veen (2024 ONSC)

Van Veen v. Van Veen (2024 ONSC 743) is a recent example where a court analyzed disclosure requests and found that the requesting party, to say the least, went too far in her requests.

In Van Veen, the husband claimed that the wife “engaged in a campaign of relentless and ongoing requests for disclosure”. According to the husband, the wife

…often hyper-focuses on irrelevant or minor details” and then relies on those details to assert that the respondent is “dishonest and/or hiding assets.”

What was noteworthy, was that the husband did not own a business, was employed by a government agency and yet one of Requests to Admit that the wife served on the husband comprised of 2,099 questions. Also, as of the date of the motion, the husband had provided a total of 2,400 pages of disclosure and served six financial statements.

Justice Mitrow held that “proportionality and common sense must be considered when ordering disclosure.” In referencing Boyd v. Fields, (2006 CarswellOnt 8675 (Ont. S.C.J.)),

Full and frank disclosure is a fundamental tenet of the Family Law Rules. However, there is also an element of proportionality, common sense, and fairness built into these rules. A party's understandable aspiration for the utmost disclosure is not the standard. Fairness and some degree of genuine relevance, which is the ability of the evidence to contribute to the fact-finding process are factors. I also observe that just as non-disclosure can be harmful to a fair trial, so can excessive disclosure be harmful because it can confuse, mislead or distract the trier of fact's attention from the main issues and unduly occupy the trier of fact's time and ultimately impair a fair trial. (emphasis added)

The court dismissed most of the wife’s request for disclosure and the following are some examples where the court assessed and ruled on specific disclosure requests.

  1. Updated and corrected address
    • The wife claimed that the husband had out-of-province real estate holdings and that the husband’s original Teraview search was only for one county and that the earlier corporate names searched were only for entities that the husband knew that the wife was “aware of”.
    • The court ruled that there was a “complete dearth of any credible evidence, documentary or otherwise, supporting these allegations.”
  1. Disclosure regarding corporate entities in other provinces
    • The husband already disclosed all interests in any corporate entities that he was associated with.
    • The court dismissed the wife’s claim indicating that her belief that the husband has interests in extra-provincial corporations was “prompted by baseless speculation.”
  1. Leases and mortgages
    • The wife sought disclosure as to lease/mortgage/lien particulars for all properties held by the husband personally or through corporate entities in various provinces.
    • The court dismissed the request again due to it falling within the category of “baseless speculation”. The husband’s response was that he only had personal mortgages and that they were known and disclosed in his financial statements.
  1. Monthly investment statements
    • The wife sought monthly statements of the husband’s investments for a year that a previous court order already addressed.Namly, the court order required statements from January 1, 2016 and onwards while the wife wanted the statements from January 1, 2015 as well.
    • The court dismissed the wife’s request noting that there was no evidence from the wife explaining why the disclosure should predate January 1, 2016.
  1. Security options noted in tax returns
    • The husband’s notice of assessment showed security options deducted in the amount of $295. The husband could not explain the deduction but still confirmed that he did not own stock options other than registered investments which he already disclosed in his financial statements.
    • The court held that despite the husband’s evidence was difficult to understand. However, since the amount on the assessment was negligible, the court dismissed the wife’s request. The court noted that “common sense and proportionality must prevail” and that it found “no useful purpose” being served in requiring the husband to spend further time, effort and costs in relation to the disclosure requested.
  1. Monthly statements for financial accounts
    • The wife requested 9 years of “’financial accounts’ that receive, purchased or held securities that were derived from exercising stock options ‘along with all other investment products held at these institutions.’”
    • The wife’s request was dismissed with the court noting that it had “no merit” since the husband already deposed that he did not own stock options, except as may be owned through registered investments.
  1. Monthly statements from financial institutions including credit card statements from all accounts from any and all corporate interests
    • The wife requested statements in addition to a period already addressed from a previous court order.
    • Justice Mitrow dismissed the wife’s requests noting that her request for additional disclosure was unnecessary and appears to be designed to “burden the respondent with the cost of further productions that are neither necessary nor relevant.”
  1. Monthly invoices from all revenue generating contracts and monthly statements for all payments received
    • The wife requested an additional year of the following which predated an existing order for similar information:
      • (a) invoices from all revenue generating contracts held by the husband personally or through a corporation; and,
      • (b) monthly statements from banks or other financial institutions for all payments received from clients of the husband, personally or through corporations.
    • The court dismissed the wife’s request due to no merit to the request.
  1. Monthly statements from all payment processing financial institutions including Square, PayPal and TSYS
    • The wife requested the above statements for the last eight years. The husband responded and claimed that he did not receive funds from any payment processing institution. Rather, all payments from the company in question were received directly to his CIBC account.
    • The court dismissed the wife’s request as again there was no merit to it.
  1. “Income and Deduction” printouts directly from CRA
    • The court dismissed the wife’s request noting that the husband already provided significant tax disclosure via his income tax returns and notices of assessment and thus her request was redundant. Namely, the information sought was already included in the tax documents provided and that her request would serve only to force the husband to incur “needless time, effort and legal expenses.”
  1. Use-of-home receipts
    • The wife’s request related to matrimonial home expenses that she sought to deduct for income tax purposes, including internet expenses, smoke/alarm systems expenses and snow removal. The wife planned to use these receipts to reduce her income in the years prior to separation by claiming them as business expenses.
    • The court did not order for the husband to provide the receipts, but rather for him to sign a direction allowing the wife to contact the service providers directly. The court reasoned that if the wife required certain receipts or invoices to finalize or amend her tax returns, then she should be the one contacting all the service providers directly.
  1. All correspondence between CRA and the husband or his representatives or agents
    • The wife requested the above correspondence regarding the husband personally or in relation to his corporate interests for the last eight years.
    • The court dismissed the wife’s request. The court reasoned that the husband’s evidence was that he had no correspondence with CRA “whatsoever since separation” and that he had received only automated notifications confirming, for example, that his tax returns were filed.
    • The court held that the wife’s request exceeded the bounds of relevancy and proportionality, and that the information sought was redundant and unlikely to add anything of value or relevance to the tax disclosure already provided. The husband made substantial tax disclosure and there was no evidence or allegation that the CRA correspondence included anything other than routine matters.

The wife made several other requests for various types of disclosure that the court also dismissed, noting that the requested disclosure was bordering on being frivolous, vexatious, contrived and based on facts that did not exist.

General Principles

With respect to disclosure issues, there are important principles in the family law context to consider.

For starters, courts and parties should consider the burden that disclosure requests bring on the disclosing party, the relevance of the requested disclosure to the issues at hand, and the costs and time to obtain the disclosure compared to its importance. (McDowell v. McDowell, 2021 ONSC 1954 at para. 31)

In determining when a party's disclosure requests are proportional, it is critical to ensure that the disclosure requested can be closely tied to the issues at the heart of the proceedings, and that the manner in which a certain item of disclosure will shape the analysis of those issues can be articulated. (McDowell v. McDowell, 2021 ONSC 1954 at para. 32)

As a simple reminder, it would help to provide the court with a clear and concise list of disclosure being sought (P.M. v. B.M., 2024 ONSC 1297 at para. 23).

Also, the correspondence by which requests are made for additional disclosure should invite the party being asked to produce documents. In the event he/she fails to produce a document, the party should provide an affidavit indicating

(a) whether the document ever existed or was in the party's possession;

(b) when it ceased to be in the party's possession; and

(c) what requests were made for the documents from any third parties believed to be in possession of them, giving the contact information, copies of the requests and the replies received, and the reasons the document could not be produced. (McDowell v. McDowell, 2021 ONSC 1954 at para. 21)

The ease of obtaining documents can be a factor in a court ordering their production. For example, requesting copies of statements should be avoided if the client requesting them is able to obtain the statements themselves (such as a joint account, or a party having signing authority to obtain statements themselves). (P.M. v. B.M., 2024 ONSC 1297 at paras. 11, 13, 22)

Monthly statements of bank and credit cards for three years prior to the date of separation seems to be a typical request. But sometimes, qualifications for such requests must be considered. For example, limited redactions of bank statements may be appropriate in circumstances where there is a need to protect a client’s privacy (e.g. allegations of domestic violence). (P.M. v. B.M., 2024 ONSC 1297 at paras. 20 and 41)

In Ellis v. Ellis (2024 ONSC 512), Piccoli J. dismissed the husband’s request for copies of the wife’s worldwide bank statements, investment accounts, credit cards, mortgages and lines of credit for the last five years. The court reasoned that there was no suggestion that the wife earned cash income and as such the request was overreaching.

Finally, court enforcement of disclosure obligations should rarely be brought before exhausting reasonable efforts to secure the other party's co-operation with requests for additional disclosure through correspondence and communication. (McDowell v. McDowell, 2021 ONSC 1954 at para. 20)

Conclusion

A request for disclosure is typically one the first steps that a lawyer takes when starting a family law file.

Most of the time, the disclosure is reasonable, necessary and is generally complied with in a timely fashion.

However, there should be limits on what a lawyer asks from the opposing counsel and what a lawyer should be expected to respond to.

Counsel should try to avoid a mindless exercise of asking for every disclosure that they can think of, being careful not to copy and paste disclosure requests from other files without adjusting the list to be specific to the new client.

Rather, thoughtfulness is key.

And such thinking should be applied when making the request and responding to them.

When we make the request, consider which disclosure is actually necessary to help you advise your client on the important issues. If most likely a certain piece of disclosure is going to have minimal impact on a case, consider not making it.

Similarly, when you are faced with a number of seemingly senseless requests from the opposing party, instead of simply advising your client to produce them, perhaps try and understand the basis of the requests in the first place.

One way is to call the opposing counsel and ask why a certain document or series of documents were requested and the purpose for the request. After the discussion, the opposing counsel may have a point and their rational reasonable.

Such a discussion may assist you in not only understanding the reasons for certain disclosure requests but also developing a rapport that can help both counsel in their negotiations to settle the matter sooner and in a more collegial fashion.

The discussion between counsel may also assist everyone to be more invested in the process and to appreciate each side’s goals and objectives rather than trivializing them.

And even if counsel end up disagreeing on certain disclosure requests, those disagreements may be more limited in scope and ultimately costing the clients less in having to argue them in court.

Using the above approach may also result in counsel having more of an intellectual disagreement rather than a shouting match where egos often lead the way.

Thoughtful discussions are usually beneficial not only for the lawyers but clients as well.

By learning from one another in the financial disclosure process, an effective result can be achieved that benefits the clients, rather than adding to their stress and frustration within an already complicated legal system.